SEC Comment Letters and M&A Outcomes
Posted: 21 Feb 2019
Date Written: February 2019
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: Suggested Citation