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SEC Enforcement: Does Forthright Disclosure and Cooperation Really Matter?

Rebecca Files

University of Texas at Dallas

June 28, 2011

This study examines the conditions under which the Securities and Exchange Commission (SEC) exercises enforcement leniency following a restatement. I explore whether cooperation with SEC staff and forthright disclosure of a restatement (e.g., disclosures reported in a timely and visible manner) reduce the likelihood of an SEC sanction or SEC monetary penalties. After controlling for restatement severity, I find that cooperation increases the likelihood of being sanctioned, perhaps because it improves the SEC’s ability to build a successful case against the firm. However, cooperation and forthright disclosures are rewarded by the SEC through lower monetary penalties.

Number of Pages in PDF File: 55

Keywords: SEC enforcement actions, accounting restatements, cooperation, voluntary disclosure, press release prominence, AAERs, investigations

JEL Classification: G18, G38, K42, M41

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Date posted: July 15, 2010 ; Last revised: June 29, 2011

Suggested Citation

Files, Rebecca, SEC Enforcement: Does Forthright Disclosure and Cooperation Really Matter? (June 28, 2011). Available at SSRN: https://ssrn.com/abstract=1640064 or http://dx.doi.org/10.2139/ssrn.1640064

Contact Information

Rebecca Files (Contact Author)
University of Texas at Dallas ( email )
P.O. Box 830688
Richardson, TX 75083-0688
United States
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