How Does Financial-Reporting Regulation Affect Industry-wide Resource Allocation?

99 Pages Posted: 5 Nov 2017 Last revised: 20 Dec 2020

Multiple version iconThere are 3 versions of this paper

Date Written: December 15, 2020

Abstract

This paper examines the impact of mandatory reporting and auditing of firms’ financial statements on industry-wide resource allocation. Using threshold-induced variation in the share of mandated firms in a given industry, I document that reporting mandates facilitate ownership dispersion in capital markets and spur competition in product markets. I, however, do not find that reporting mandates unambiguously improve the efficiency of industry-wide resource allocation. With respect to auditing mandates, I find only that they impose a fixed cost on firms, deterring smaller entrants.

Keywords: Financial-reporting regulation, Disclosure, Auditing, Competition, Resource Allocation

JEL Classification: K22, L51, M41, M42, M48, O43, O47

Suggested Citation

Breuer, Matthias, How Does Financial-Reporting Regulation Affect Industry-wide Resource Allocation? (December 15, 2020). Available at SSRN: https://ssrn.com/abstract=3063320 or http://dx.doi.org/10.2139/ssrn.3063320

Matthias Breuer (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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