UCLA

This paper examines the real effects of the dissemination of corporate disclosures on innovation.Using the staggered adoption of the EDGAR system as a positive shock to information dissemination, I document that dissemination has positive effects on innovation efficiency and follow-on innovation. My findings suggest that broader dissemination of corporate disclosures leads to knowledge spillovers across firms and reduces uncertainty about the expected value of innovation. Moreover, focal firms differentiate their innovation portfolios from their peers’ portfolios and invest in more novel technologies. These positive spillovers also extend to innovation for private firms. Overall, my paper adds to the understanding of the impact of disclosure processing costs on innovation.