Do Corporate Attorneys Influence Financial Disclosure?
Jason D. Schloetzer
Georgetown University - McDonough School of Business
Georgetown University - Robert Emmett McDonough School of Business
May 29, 2012
Georgetown McDonough School of Business Research Paper No. 2012-09
We examine two perspectives of the role of corporate attorneys and how they relate to financial disclosure. The first is the gatekeeper perspective in which corporate attorneys are responsible for promoting regulatory compliance. The second is the advisor perspective in which corporate attorneys help clients minimize the costs of regulation. Using a novel dataset, we identify the corporate attorney responsible for preparing a firm’s SEC disclosures and use American Lawyer rankings to classify top-tier corporate attorneys. We find that top-tier corporate attorneys are retained by firms with greater litigation risk, greater financial reporting complexity, and a Big N auditor, among other factors. Consistent with the advisor perspective, we find lower compliance with a specific mandatory SEC disclosure rule among firms with a top-tier corporate attorney. Further, SEC compliance increases among firms with a top-tier corporate attorney relative to other firms after recent SEC actions that increased noncompliance costs. The results indicate that corporate attorneys act more as advisors than as gatekeepers of financial disclosure.
Number of Pages in PDF File: 52
Keywords: corporate governance, monitoring, mandatory disclosure, legal expertise, financial reportingworking papers series
Date posted: January 28, 2012 ; Last revised: October 25, 2012
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