Accounting Disclosure, Governance Standards and Innovation Activities in Emerging Markets

Abstract

We investigate how investor protection resulted from country-level and firm-level governance standards influence the relationship between market disciplines resulted from firm-level accounting disclosure and innovation activities. Employing a sample across 14 emerging markets, evidence confirms that the effects of firm-level accounting disclosure on innovation activities are more important in a country with weaker governance standards and for firm with poor corporate governance. The results suggest that market disciplines can substitute for investor protection.