The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research

Christian Leuz, Peter D. Wysocki

Research output: Contribution to journalArticlepeer-review

356 Scopus citations


This paper discusses the empirical literature on the economic consequences of disclosure and financial reporting regulation, drawing on U.S. and international evidence. Given the policy relevance of research on regulation, we highlight the challenges with (1) quantifying regulatory costs and benefits, (2) measuring disclosure and reporting outcomes, and (3) drawing causal inferences from regulatory studies. Next, we discuss empirical studies that link disclosure and reporting activities to firm-specific and market-wide economic outcomes. Understanding these links is important when evaluating regulation. We then synthesize the empirical evidence on the economic effects of disclosure regulation and reporting standards, including the evidence on International Financial Reporting Standards (IFRS) adoption. Several important conclusions emerge. We generally lack evidence on market-wide effects and externalities from regulation, yet such evidence is central to the economic justification of regulation. Moreover, evidence on causal effects of disclosure and reporting regulation is still relatively rare. We also lack evidence on the real effects of such regulation. These limitations provide many research opportunities. We conclude with several specific suggestions for future research.

Original languageEnglish (US)
Pages (from-to)525-622
Number of pages98
JournalJournal of Accounting Research
Issue number2
StatePublished - May 1 2016


  • Accounting standards
  • Capital markets
  • Cost-benefit analysis
  • Disclosure
  • IFRS
  • Institutional economics
  • International accounting
  • Political economy
  • Real effects
  • Regulation
  • Transparency

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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