Securities law expertise and corporate disclosure

Zahn Bozanic, Preeti Choudhary, Kenneth J. Merkley

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

We examine whether securities lawyers involved in SEC comment letter inquiries act as client advocates by resisting disclosure changes or as gatekeepers by encouraging disclosure transparency. Consistent with an advocacy role, we find that securities lawyers' involvement in SEC comment letters is associated with resisting disclosure inquiries through redacting information from filings and issuing fewer amendments to previous disclosures. Our evidence also supports the view that the role of securities lawyers extends beyond the specific inquiry; their involvement is associated with improved readability and more cautionary language in the subsequent 10-K, and fewer future restatements and comment letters. Last, we find that securities lawyers serve more of an advocacy role when proprietary costs are high and when the inquiry involves a possible amendment, but more of a gatekeeper role when an inquiry is more complex.

Original languageEnglish (US)
Pages (from-to)141-172
Number of pages32
JournalAccounting Review
Volume94
Issue number4
DOIs
StatePublished - Jan 1 2019

Fingerprint

Corporate disclosure
Securities law
Expertise
Disclosure
Lawyers
Gatekeeper
Advocacy
Amendments
Restatements
Readability
Proprietary costs
Language
Transparency

Keywords

  • Comment letters
  • Disclosure
  • External advisor
  • Legal counsel
  • Regulation
  • SEC
  • Securities law

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Securities law expertise and corporate disclosure. / Bozanic, Zahn; Choudhary, Preeti; Merkley, Kenneth J.

In: Accounting Review, Vol. 94, No. 4, 01.01.2019, p. 141-172.

Research output: Contribution to journalArticle

Bozanic, Zahn ; Choudhary, Preeti ; Merkley, Kenneth J. / Securities law expertise and corporate disclosure. In: Accounting Review. 2019 ; Vol. 94, No. 4. pp. 141-172.
@article{6fdfe38a9d3b479ba031a20c1890d611,
title = "Securities law expertise and corporate disclosure",
abstract = "We examine whether securities lawyers involved in SEC comment letter inquiries act as client advocates by resisting disclosure changes or as gatekeepers by encouraging disclosure transparency. Consistent with an advocacy role, we find that securities lawyers' involvement in SEC comment letters is associated with resisting disclosure inquiries through redacting information from filings and issuing fewer amendments to previous disclosures. Our evidence also supports the view that the role of securities lawyers extends beyond the specific inquiry; their involvement is associated with improved readability and more cautionary language in the subsequent 10-K, and fewer future restatements and comment letters. Last, we find that securities lawyers serve more of an advocacy role when proprietary costs are high and when the inquiry involves a possible amendment, but more of a gatekeeper role when an inquiry is more complex.",
keywords = "Comment letters, Disclosure, External advisor, Legal counsel, Regulation, SEC, Securities law",
author = "Zahn Bozanic and Preeti Choudhary and Merkley, {Kenneth J.}",
year = "2019",
month = "1",
day = "1",
doi = "10.2308/accr-52265",
language = "English (US)",
volume = "94",
pages = "141--172",
journal = "Accounting Review",
issn = "0001-4826",
publisher = "American Accounting Association",
number = "4",

}

TY - JOUR

T1 - Securities law expertise and corporate disclosure

AU - Bozanic, Zahn

AU - Choudhary, Preeti

AU - Merkley, Kenneth J.

PY - 2019/1/1

Y1 - 2019/1/1

N2 - We examine whether securities lawyers involved in SEC comment letter inquiries act as client advocates by resisting disclosure changes or as gatekeepers by encouraging disclosure transparency. Consistent with an advocacy role, we find that securities lawyers' involvement in SEC comment letters is associated with resisting disclosure inquiries through redacting information from filings and issuing fewer amendments to previous disclosures. Our evidence also supports the view that the role of securities lawyers extends beyond the specific inquiry; their involvement is associated with improved readability and more cautionary language in the subsequent 10-K, and fewer future restatements and comment letters. Last, we find that securities lawyers serve more of an advocacy role when proprietary costs are high and when the inquiry involves a possible amendment, but more of a gatekeeper role when an inquiry is more complex.

AB - We examine whether securities lawyers involved in SEC comment letter inquiries act as client advocates by resisting disclosure changes or as gatekeepers by encouraging disclosure transparency. Consistent with an advocacy role, we find that securities lawyers' involvement in SEC comment letters is associated with resisting disclosure inquiries through redacting information from filings and issuing fewer amendments to previous disclosures. Our evidence also supports the view that the role of securities lawyers extends beyond the specific inquiry; their involvement is associated with improved readability and more cautionary language in the subsequent 10-K, and fewer future restatements and comment letters. Last, we find that securities lawyers serve more of an advocacy role when proprietary costs are high and when the inquiry involves a possible amendment, but more of a gatekeeper role when an inquiry is more complex.

KW - Comment letters

KW - Disclosure

KW - External advisor

KW - Legal counsel

KW - Regulation

KW - SEC

KW - Securities law

UR - http://www.scopus.com/inward/record.url?scp=85070361581&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85070361581&partnerID=8YFLogxK

U2 - 10.2308/accr-52265

DO - 10.2308/accr-52265

M3 - Article

AN - SCOPUS:85070361581

VL - 94

SP - 141

EP - 172

JO - Accounting Review

JF - Accounting Review

SN - 0001-4826

IS - 4

ER -