Abstract

http://ssrn.com/abstract=1291345
 
 

References (63)



 
 

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Regulatory Oversight of Financial Reporting: Securities and Exchange Commission Comment Letters


Rick Johnston


Rice University - Jesse H. Jones Graduate School of Business

Reining Petacchi


Massachusetts Institute of Technology (MIT) - Sloan School of Management

June 4, 2014


Abstract:     
The Securities and Exchange Commission (SEC) reviews company filings (10Q, 10K, S1, etc.) submitted to them. If a review identifies potential deficiencies, the SEC staff sends the company a comment letter seeking clarification, additional information, and ultimately perhaps, revision of the filing or future filings. We explore the content and resolution of SEC comment letters and then examine the informational consequences of letter resolution. The content analysis shows that nearly half of all comments involve accounting application, financial reporting, and disclosure issues. More than 17% of our sample immediately amend filings to resolve comment letters, and financial statements and/or footnotes are frequently revised. Following comment letter resolution, return volatility and trading volume around earning announcements decline and analyst forecast accuracy improves. We conclude the SEC’s oversight has beneficial informational effects.

Number of Pages in PDF File: 74

Keywords: Securities and Exchange Commission (SEC), Comment Letter, Disclosure, Enforcement, Regulation

JEL Classification: G12, G14, G18, M48

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Date posted: October 29, 2008 ; Last revised: June 5, 2014

Suggested Citation

Johnston, Rick and Petacchi, Reining, Regulatory Oversight of Financial Reporting: Securities and Exchange Commission Comment Letters (June 4, 2014). Available at SSRN: http://ssrn.com/abstract=1291345 or http://dx.doi.org/10.2139/ssrn.1291345

Contact Information

Rick M. Johnston (Contact Author)
Rice University - Jesse H. Jones Graduate School of Business ( email )
6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
Reining Petacchi
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
100 Main Street
Cambridge, MA 02142
United States
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