SEC Resource Constraints and Comment Letter Quality

Ege, Matthew; Glenn, Jennifer L.; Robinson, John R.

doi:10.2139/ssrn.3137092

Cited by 2 publications

(4 citation statements)

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“…To help assess the costs/benefits of additional resources to ADOs, future research could study the usefulness of broader scope comment letters and optimal comment letter processing time. Our findings should be of interest to regulators and complement research examining comment letter quality of transactional filings (e.g., IPOs and acquisitions), which require immediate review (Ege et al 2018).…”

Section: Resultsmentioning

confidence: 61%

“…Transactional filings require immediate review by the SEC. While our study presents the effects of comment letter effectiveness when busyness can be anticipated and planned for, Ege et al (2018) examine a setting where busyness cannot be anticipated.…”

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confidence: 99%

“…Ege et al () examine the influence of resource constraints on comment letters related to transactional filings (e.g., IPOs, acquisitions). Transactional filings require immediate review by the SEC.…”

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confidence: 99%

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How Busyness Influences SEC Compliance Activities: Evidence from the Filing Review Process and Comment Letters

Gunny

Hermis

2019

Contemporary Accting Res

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The SEC reviews firm filings and issues comment letters on those filings. These comment letters play an important role in the assessment of firm value. These activities are seasonally compressed because over 70 percent of registrants have a December fiscal year‐end. Research in other settings finds that busyness leads to negative outcomes. We examine how busyness impacts the frequency, scope, and timeliness of comment letters. We find that the SEC issues fewer comment letters when busy, focuses its limited resources on the most severe cases of disclosure noncompliance, and extends the amount of time between receiving a firm's filing and issuing a comment letter. Despite this, we find no evidence that the SEC misses more serious compliance issues when busy. Our results have implications for policymakers responsible for allocating resources to the SEC.

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Section: Resultsmentioning

confidence: 61%

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confidence: 99%

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How Busyness Influences SEC Compliance Activities: Evidence from the Filing Review Process and Comment Letters

Gunny

Hermis

2019

Contemporary Accting Res

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“…Moreover, our results indicate that the impact of securities commission oversight on the complexity persists through at least three years and also is not higher for firms that receive more comment letters. Hence, the results provide insights for the concerns about resource constraint-that is a central challenge for securities commissions (e.g., Ege et al, 2018)-and suggest that the securities commissions could mitigate their resource constraints in the current period by delaying the periodic reviews of some firms that received a comment letter over the past year. This study still has limitations.…”

Section: Table 14mentioning

confidence: 92%

Does Securities Commission Oversight Reduce the Complexity of Financial Reporting?

Hesarzadeh

Rajabalizadeh

2020

RC-SAR

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En este trabajo se investiga si la supervisión de la Comisión de Valores reduce la complejidad de los informes financieros. Para ello se utilizan las cartas de opinión (comment letters) de la Comisión de Valores de Irán. Además, para medir dicha complejidad, se emplea el índice de Fog. Usando un diseño de diferencia en diferencias con la aproximación propensity score matching, se encuentra que la supervisión de la Comisión de Valores reduce esta complejidad. Además, se muestra que el impacto de la supervisión de las comisiones de valores en la complejidad de los informes financieros es mayor para las empresas con mayor calidad de gobierno corporativo. También se documenta que este impacto (1) no se limita a un año y persiste al menos dos años después, y (2) no es mayor para las empresas que reciben más cartas de opinión (comment letters). Además, se constata el efecto indirecto de la supervisión de la comisión de valores, en el sentido de que las empresas que no reciben ninguna carta de opinión (comment letters) reducen la complejidad de sus informes financieros si la comisión de valores ha hecho comentarios sobre la empresa líder del sector o sobre un competidor cercano. En definitiva, este artículo proporciona, por un lado, evidencia relacionada con el debate internacional sobre si las comisiones de valores podrían tener efectos beneficiosos en la información financiera que elaboran las empresas y, por otro, contribuye a la literatura sobre la complejidad de los informes financieros y los factores que reducen la misma, lo cual ocupa un lugar destacado entre los temas más importantes en el contexto de la información financiera internacional. We investigate whether securities commission oversight reduces the complexity of financial reporting (complexity). To measure the securities commission oversight, we use comment letters from securities commission of Iran. Further, to measure the complexity, we employ the Fog index. Using a difference-in-differences design with a propensity score matching approach, we find that the securities commission oversight reduces the complexity. Furthermore, we document that the impact of securities commission oversight on the complexity is stronger for firms with higher corporate governance quality. In addition, we document that the impact of securities commission oversight on the complexity (1) is not limited to one year and persists through at least two years later; and (2) is not higher for firms that receive more comment letters. We further document the spillover effect of securities commission oversight, in the sense that firms not receiving any comment letter reduce their complexity if the securities commission has commented on the industry leader or a close rival. Collectively, this paper, on the one hand, provides related evidence for the international debate on whether securities commissions could provide beneficial effects; and on the other hand, contributes to the literature on the complexity and its reducing factors that are among the most important issues in the context of international financial reporting.

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SEC Resource Constraints and Comment Letter Quality

Cited by 2 publications

References 0 publications

How Busyness Influences SEC Compliance Activities: Evidence from the Filing Review Process and Comment Letters

How Busyness Influences SEC Compliance Activities: Evidence from the Filing Review Process and Comment Letters

Does Securities Commission Oversight Reduce the Complexity of Financial Reporting?

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