Noncompliance with SEC Regulations: Evidence from Timely Loan Disclosures

58 Pages Posted: 10 Jun 2020 Last revised: 12 Apr 2021

See all articles by Judson Caskey

Judson Caskey

University of California, Los Angeles (UCLA) - Accounting Area

Kanyuan (Kevin) Huang

University of California, Los Angeles (UCLA), Anderson School of Management, Students

Daniel Saavedra

UCLA Anderson School of Management

Date Written: April 7, 2021

Abstract

We use required 8-K filings around major borrowings to shed light on firms’ choices of whether to comply with SEC disclosure rules. Exploiting within-firm variation, we find that firms are more likely to hide loans with high spreads and tight financial covenants. We further find that firms appear to exploit the ambiguity of the definition of materiality as they are more likely to selectively disclose (hide) “immaterial” loans when interest rates are low (high). Firms are less likely to hide loans when investors anticipate borrowing during asset acquisition, when firms are followed by more equity analysts or receive more investor attention, and when the firms’ stock prices are more volatile. Lastly, we provide evidence that the SEC does not rigorously enforce compliance with 8-K loan disclosures.

Keywords: Disclosure, Bank Loans, SEC Monitoring, Form 8-K, Materiality

JEL Classification: G21, G28, G32, H25, H32

Suggested Citation

Caskey, Judson and Huang, Kanyuan and Saavedra, Daniel, Noncompliance with SEC Regulations: Evidence from Timely Loan Disclosures (April 7, 2021). Available at SSRN: https://ssrn.com/abstract=3602032 or http://dx.doi.org/10.2139/ssrn.3602032

Judson Caskey (Contact Author)

University of California, Los Angeles (UCLA) - Accounting Area ( email )

D410 Anderson Complex
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://sites.google.com/site/judsoncaskey/

Kanyuan Huang

University of California, Los Angeles (UCLA), Anderson School of Management, Students ( email )

Los Angeles, CA
United States

Daniel Saavedra

UCLA Anderson School of Management ( email )

Los Angeles, CA
United States

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