Matthias Breuer, Christian Leuz, Steven Vanhaverbeke, 08 April 2021

Firms often argue that disclosure and reporting regulations such as the EU Accounting Directive require them to reveal proprietary information, which discourages innovation. This column explores the effects of disclosure requirements on corporate innovation in the EU, and finds that forcing firms to publicly disclose their financial statements does indeed discourage innovative activities. At the industry level, positive information spillovers to competitors, suppliers, and customers appear insufficient to compensate for the negative direct effect on innovation. Indeed, the spillovers seem to concentrate innovation within a few large firms in a given industry.

Pierce O’Reilly, Kevin Parra Ramirez, Michael A. Stemmer, 31 January 2020

Since the G20 declared in 2009 that “the era of bank secrecy is over”, jurisdictions have implemented an unprecedented range of measures designed to increase tax transparency by ensuring that information on foreign financial assets would be disclosed to tax authorities. This column presents the main results from a recent study on the impact of exchange of information on foreign-owned bank deposits in international financial centres. The findings highlight the effectiveness of the expansion of automatic exchange of information and provide evidence of the success of a comprehensive multilateral approach towards tax transparency.

Jeffrey L. Furman, Markus Nagler, Martin Watzinger, 31 March 2019

It is a concern amongst policymakers that the disclosure component of patents is insufficient in stimulating subsequent innovation. Using evidence on patent trends around Patent Depository Libraries in the US, this column shows that the availability of information on prior art positively impacts innovation in the field. In the pre-internet era, these libraries helped reduce geographical barriers to knowledge diffusion.

Itai Ater, Oren Rigbi, 20 January 2018

The ability to compare prices openly and easily is widely thought to foster competitiveness, but mandatory disclosure of pricing information can also facilitate collusion between sellers. This column uses evidence from before and after the introduction of price disclosure regulation in the Israeli supermarket industry to evaluate how price transparency affected food prices. Mandatory disclosure decreased the dispersion and, to a lesser extent, the levels of prices. On average, Israeli consumers saved about $27 per month thanks to the regulation.

Ginger Jin, Michael Luca, Daniel Martin, 22 July 2015

Theories of voluntary disclosure suggest that even when disclosure is voluntary, market forces can drive firms to completely reveal information about their quality. This column investigates these predictions in an experimental setting. Laboratory results suggest widespread failures of the theoretical predictions – senders do not fully disclose, and receivers are not fully sceptical about non-disclosure. This suggests a role for policymakers to help customers understand the sound of silence.

Clemens Bonner, Iman van Lelyveld, Robert Zymek, 01 November 2013

What are the determinants of banks’ liquidity holdings and how are these reshaped by liquidity regulation? Based on a sample of 7,000 banks in 30 OECD countries, this column argues that banks’ liquidity buffers are determined by a combination of both bank- and country-specific variables. The presence of liquidity regulation substitutes for most of these determinants while complementing the role of size and institutions’ disclosure requirements. The complementary nature of disclosure and liquidity requirements provides a strong rationale for considering them jointly in the design of regulation.

Xavier Freixas, Christian Laux, 17 April 2012

Faith in market discipline has been shattered by the financial crisis. This column argues that the failure of market discipline has different roots. It points to a lack of transparency and efficiency, particularly when it is needed most. In order to rectify this, however, it is not enough to merely increase the provision and disclosure of information. Instead, transparency depends on how that information is interpreted and used.

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