The power of words in capital markets: SEC comment letters on foreign issuers and the impact of home country enforcement

Chantziaras, Antonios; Koulikidou, Kleopatra; Leventis, Stergios

doi:10.1016/j.intaccaudtax.2020.100359

Cited by 5 publications

(1 citation statement)

References 76 publications

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“…Quantitatively, prior literature has examined cross‐sectional variation in comment letters based on observable features such as the number of unique topics discussed (Heese et al 2017), the number of filings (Bozanic et al 2019), and the length of the conversation in days or rounds (Cassell et al 2013; Gunny and Hermis 2020). 23 Qualitatively, previous research using textual analysis of comment letters has focused on the length in the number of characters or words (Johnson et al 2020; Lowry et al 2020; Shen and Tan 2020), readability (Ballestero and Schmidt 2019; Cassell et al 2019), negative tone (Agarwal et al 2017; Chantziaras et al 2021; Ege et al 2020), linguistic strength (Liu and Moffitt 2016), parsing of staff information (Ege et al 2020; Kubic 2021), or identification of specific topics (Dechow et al 2016). More sophisticated incorporation of textual analysis includes latent Dirichlet allocation to classify comment letters textually as important or unimportant based on their ability to predict future restatements and write‐downs (Ryans 2021) and Kullback‐Leibler divergence to map textual components of comment letters to changes in future disclosures (Lowry et al 2020).…”

Section: Commentary On the Sec Filing Review Process Literaturementioning

confidence: 99%

The SEC Filing Review Process: A Survey and Future Research Opportunities*

Cunningham

Leidner

2022

Contemporary Accting Res

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As part of its goal to monitor and enhance the quality of information available to investors, the SEC reviews companies' filings to ensure compliance with applicable financial reporting and disclosure requirements. Increased public interest and the substantial costs for both the SEC in reviewing and the companies in responding have led to a rapidly growing body of accounting literature that examines the filing review process. We survey and comment on 80 published and unpublished academic research papers in this literature and identify significant gaps that future research should address. We also summarize the institutional features of the filing review process, aiming to inform future academic studies. Our survey should be of interest to both academics and market participants evaluating the effectiveness and efficiency of the filing review process.

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Section: Commentary On the Sec Filing Review Process Literaturementioning

confidence: 99%

The SEC Filing Review Process: A Survey and Future Research Opportunities*

Cunningham

Leidner

2022

Contemporary Accting Res

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A cross‐language analysis of disclosure properties: Evidence from Hong Kong

Do,

Hu,

Nabar

2024

J Corp Accounting Finance

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Using the setting of Hong Kong, we examine how the linguistic properties of financial disclosure differ across languages. We exploit the requirement that firms listed on the Hong Kong Stock Exchange publish annual reports in two languages, English and Chinese. We find that for the same firm, English reports are more positive, convey more uncertainty, and focus more on the past and present and less on the future, than Chinese reports. We also find that English (Chinese) reports are more likely to manage their tone by varying the frequency of positive (negative) words. Finally, the stock market only reacts positively to tone management in Chinese reports. Overall, the results suggest that there are significant and fundamental differences in the linguistic properties of English and Chinese reports and that such differences have material implications for how investors perceive the reports.

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