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Stack, Kristin (2020) SPILLOVER EFFECTS OF SEC COMMENTS ON OTHER FIRM ACTIVITIES. Doctoral Dissertation, University of Pittsburgh. (Unpublished)

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This dissertation investigates the impact of the Securities and Exchange Commission (SEC) filing review process on firms’ activities. Prior academic research has documented several benefits of the SEC filing review process, yet anecdotal evidence suggests a previously undocumented effect: SEC comment letters draw on firms’ constrained resources, resulting in spillover effects on other firm activities. About 64 percent of all periodic SEC comment letters are unlikely to identify misapplication of accounting standards. Using Naïve Bayesian textual classification, I identify these SEC comment letters, and using a large sample of U.S. firms, I show that firms react to them. Consistent with comment letters having spillover effects on other firm activities, I predict and find that firms are less timely in their earnings announcements, less likely to issue quarterly management guidance, and less likely to issue debt during quarters in which they are responding to an SEC comment letter, even when the comment letter fails to detect misapplication of accounting standards. Cross sectional analyses suggest that this effect is stronger for comment letters that take longer to resolve, for firms with fewer financial reporting resources, and for more unpredictable comment letters. This study provides initial empirical evidence that SEC comment letters impose on CFOs a tradeoff between remediation and other firm activities, even on CFOs that are in compliance with accounting regulation. This result should be of interest to regulators, practitioners, and academics.


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Item Type: University of Pittsburgh ETD
Status: Unpublished
CreatorsEmailPitt UsernameORCID
ETD Committee:
TitleMemberEmail AddressPitt UsernameORCID
Committee CoChairLi,
Committee CoChairEvans, John
Committee MemberFeng,
Committee MemberGunn,
Committee MemberHoffman,
Committee MemberKrishnan,
Date: 9 July 2020
Date Type: Publication
Defense Date: 29 April 2020
Approval Date: 9 July 2020
Submission Date: 26 June 2020
Access Restriction: No restriction; Release the ETD for access worldwide immediately.
Number of Pages: 69
Institution: University of Pittsburgh
Schools and Programs: Joseph M. Katz Graduate School of Business > Business Administration
Degree: PhD - Doctor of Philosophy
Thesis Type: Doctoral Dissertation
Refereed: Yes
Uncontrolled Keywords: comment letters; resource allocation; SEC; remediation
Date Deposited: 09 Jul 2020 23:01
Last Modified: 09 Jul 2020 23:01


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