Individual Lawyers, the SEC Revolving Door, and Comment Letters

45 Pages Posted: 9 Jan 2018 Last revised: 22 Jun 2018

See all articles by Michael Shen

Michael Shen

National University of Singapore - Department of Accounting

Samuel T. Tan

Singapore Management University

Date Written: January 9, 2018

Abstract

Government officials, advocacy groups, and the business press have raised concerns that former SEC employees may continue to influence the SEC after leaving the agency. Using a hand-collected database of individual lawyers that represent firms in responding to SEC comment letters, we examine the impact of individual lawyers, and lawyers formerly employed by the SEC, on the comment letter process. We document significant differences between lawyers and law firms in their clients’ resistance to SEC comment letters, and find that firms that retain former SEC employees are larger, more profitable, and more likely to have received a comment letter raising accounting issues. After matching on lawyer, comment letter, and firm characteristics, we find evidence consistent with former SEC employees increasing resistance in the comment letter process: conversations involving former SEC employees involve more negotiation, and result in fewer financial statement amendments.

Keywords: SEC comment letters, external counsel, revolving door, regulatory capture

JEL Classification: G18, K22, M41, M48

Suggested Citation

Shen, Michael and Tan, Samuel T., Individual Lawyers, the SEC Revolving Door, and Comment Letters (January 9, 2018). Available at SSRN: https://ssrn.com/abstract=3096855 or http://dx.doi.org/10.2139/ssrn.3096855

Michael Shen

National University of Singapore - Department of Accounting ( email )

Biz 1, #07-09
15 Kent Ridge Drive
Singapore, Singapore 119245
Singapore

Samuel T. Tan (Contact Author)

Singapore Management University ( email )

60 Stamford Road
Singapore 178900
Singapore

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