R&D tax allowance and voluntary information disclosures

Purpose: This paper examines whether the R&D tax allowance in force in Poland since 2016 has increased the voluntary disclosure of information on innovation, R&D, and strategic plans in the management commentary of companies listed on the Warsaw Stock Exchange (WSE). Methodology/approach: First, the Tobit model was used to examine the determinants of recognising development works in a sample of 29,288 observations from 3,406 firms. Second, it uses logit and generalised least squares (GLS) methods to analyse 556 management commentaries from 97 public companies that benefited from the R&D tax allowance between 2016 and 2021. Findings: We show that tax relief increases the probability of recognising development work and disclosing information about patents to signal innovativeness and engagement in R&D. Indebted companies disclose more R&D information and strategic plans. IFRS and advanced management increase disclosures, as opposed to tax planning that uses tax havens or that is supported by more advisors. Companies audited by the Big 4 provide fewer details on R&D outcomes and strategic plans. Research limitations/implications: Extending the sample requires collecting disclosure data based on the wording in management commentaries using text-mining tools. Originality/value: The paper contributes to the literature by identifying that R&D tax allowance influences voluntary R&D information disclosure in management commentaries, especially by smaller companies in debt with larger intangible assets.