Uneven Regulation and Economic Reallocation: Evidence from Transparency Regulation

84 Pages Posted: 19 Oct 2020 Last revised: 17 May 2021

Date Written: August 29, 2020

Abstract

We investigate the impact of uneven transparency regulation across countries and industries on the location of economic activity. Using two distinct sources of regulatory variation—the varying extent of financial-reporting requirements and the staggered introduction of electronic business registers in Europe—, we consistently document that direct exposure to transparency regulation is negatively associated with the focal industry’s economic activity in terms of inputs (e.g., employment) and outputs (e.g., production). By contrast, we find that indirect exposure to supplier and customer industries’ transparency regulation is positively associated with the focal industry’s economic activity. Our evidence suggests uneven transparency regulation can reallocate economic activity from regulated toward unregulated countries and industries, distorting the location of economic activity.

Keywords: Regulation, Reallocation, Transparency, Disclosure, Supply Chain

JEL Classification: K22, L51, M21, M41, M48

Suggested Citation

Breuer, Matthias and Breuer, Patricia, Uneven Regulation and Economic Reallocation: Evidence from Transparency Regulation (August 29, 2020). Available at SSRN: https://ssrn.com/abstract=3683033 or http://dx.doi.org/10.2139/ssrn.3683033

Matthias Breuer (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Patricia Breuer

University of Mannheim ( email )

Mannheim
Germany

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