We study the real effects on innovation of a transformative change in corporate disclosure dissemination, the implementation of the SEC’s EDGAR system. On the one hand, increased disclosure dissemination can lower firms’ cost of capital, thereby stimulating innovative activity. On the other hand, increased dissemination can exacerbate proprietary disclosure costs, reducing firms’ incentives to innovate. We show that treated firms reduce innovation investment following EDGAR’s implementation. In contrast, EDGAR reporting firms’ innovation investment cuts are met with an increase in innovation investment by their technology rivals. Consistent with an increase in proprietary costs, EDGAR-filers disclose less about their innovation activities. We also find evidence of a redistribution of innovative activity from public to private firms not subject to EDGAR disclosure requirements. Overall, our results are consistent with increased disclosure dissemination crowding out investment in innovative projects, whose returns negatively depend on information spillovers

Reviews the book "Accounting Education: An Innovative Approach," by Sunion Theodore Hong

We predict that a firm's greater accounting comparability with its industry peers facilitates its learning from those peer firms' research and development (R&D) investments, allowing that firm to have greater innovative efficiency. We estimate accounting comparability using pro forma capitalized R&D earnings that link lagged R&D expenditures to future profitability employing the Almon (1965) distributed lag model. We find that greater accounting comparability leads to enhanced ability to predict future cash flows generated by R&D investments of peer firms. In the cross-section, we observe that the relation between accounting comparability and innovative efficiency is stronger if peer firms exhibit higher accounting (accrual) quality and are themselves successful innovators. In sum, this study shows that a shared qualitative characteristic of accounting, namely, accounting comparability, is positively associated with innovative efficiency

Innovations often fail to gain adoption by the accounting profession. A factor affecting the rate of adoption of innovations is the perceptions of innovations by individual groups within a profession. The objective of this article is to provide empirical evidence regarding the extent to which differences occur in accounting interest groups' perceptions of the need for and future rate of adoption of accounting innovations. The research evidence indicates that accounting academicians perceive a higher need for adoption and future rate of adoption of innovations. CPAs and financial executives are systematically lower on both variables, and investment analysts fall in the middle range. These findings suggest that the needs and values of the CPA and financial executive groups may be slowing the rate of adoption of accounting innovations. In summary, the findings of this research indicate that system effects are ubiquitous in the accounting profession and could be an important area for research directed toward discovering methods of affecting the rate of adoption of accounting innovations. System effects are the influences of the norms, values, and functions of a group on the behavior of the individual members of that group

Reviews the book "Return on Investment: Practical Theory and Innovative Applications," by Robert A. Peters

Reviews the book "Illustrations of Accounting for Innovative Financial Arrangement," by Hortense Goodman and Leonard Lorensen

Reviews the book "A Review of Innovative Approaches to College Teaching," by Beatrice Gross and Ronald Gross

Reviews the book "Planning for Innovation Through Dissemination and Utilization of Knowledge," by Ronald G. Havelock

This study examines whether financial accounting standards moderate the effectiveness of tax policy. Specifically, we examine whether myopic managers' focus on short-term financial reporting reduces the effectiveness of tax subsidies that incentivize innovation. We employ a novel setting, the issuance of Financial Interpretation No. 48 (FIN 48), which changed the financial reporting for some important, yet uncertain, tax incentives to innovate. For firms most affected by the standard change, we find evidence of reduced investment in innovation, reduced sensitivity of investment to tax incentives, and reduced future innovative output. Consistent with earnings myopia, we find the effect is more pronounced in firms with higher levels of transient institutional ownership and newly vesting equity compensation. These results indicate financial reporting myopia has real effects on innovation and can reduce tax policy effectiveness. The results further suggest that tax policymakers should consider both financial reporting and cash flow incentives in designing policy

Reviews the book "Creative and Innovative Management: Essays in Honor of George Kozmetsky," edited by A. Charnes and W.W. Cooper