How Changes to Form 8-K Disclosure Rules Affect Corporate Innovation

Studies have shown that the disclosure of information can affect a company’s technological innovation in different ways, depending on how complete or timely it is. The complete disclosure can promote innovation by making capital providers more receptive to providing financing, reducing the likelihood that managers will be fired for poor innovation output, and disciplining managers during R&D project implementation. The timeliness of disclosure can undermine innovation by creating  managerial myopia that can cause under-investment in R&D. Since completeness and timeliness are valuable to investors and encouraged by accounting-standard setters, we investigate whether disclosures that have both characteristics are good or … Read more