SEC Comment Letters and M&A Outcomes

Posted: 21 Feb 2019

See all articles by Bret A. Johnson

Bret A. Johnson

George Mason University - Department of Accounting

Ling Lei Lisic

Virginia Polytechnic Institute & State University - Pamplin College of Business

Joon Seok Moon

George Washington University - Department of Accountancy

Mengmeng Wang

State University of New York (SUNY) - Buffalo

Date Written: February 2019

Abstract

Prior research on SEC comment letters has almost exclusively focused on reviews of periodic filings, such as 10-Ks, which are selectively reviewed by the SEC. Transactional filing reviews, such as those related to mergers and acquisitions (M&A), are all scrutinized by the SEC and are a top priority to the SEC and to the executives of the filing companies, yet have received little attention from the literature. We examine the impact of SEC comment letters on one type of transactional filing, Form S-4, on short- and long-term M&A outcomes. We find that S-4s that receive an SEC comment letter have a significantly higher completion rate although a longer duration. S-4s that receive an SEC comment letter are less likely to have a goodwill impairment or a restatement after the M&A deal is completed. These findings provide evidence on the costs and benefits of the SEC’s disclosure regulation over M&A deals.

Keywords: SEC, Comment Letter, M&A

JEL Classification: G34, M41, M48

Suggested Citation

Johnson, Bret A. and Lisic, Ling Lei and Moon, Joon Seok and Wang, Mengmeng, SEC Comment Letters and M&A Outcomes (February 2019). Available at SSRN: https://ssrn.com/abstract=3335390

Bret A. Johnson (Contact Author)

George Mason University - Department of Accounting ( email )

Fairfax, VA
United States
703-993-8185 (Phone)

Ling Lei Lisic

Virginia Polytechnic Institute & State University - Pamplin College of Business ( email )

1016 Pamplin Hall
Blacksburg, VA 24061
United States

Joon Seok Moon

George Washington University - Department of Accountancy ( email )

School of Business and Public Management
Washington, DC 20052
United States

Mengmeng Wang

State University of New York (SUNY) - Buffalo ( email )

12 Capen Hall
Buffalo, NY 14222
United States

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