Securities law expertise and corporate disclosure

Zahn Bozanic, Preeti Choudhary, Kenneth J. Merkley

Research output: Contribution to journalArticle

2 Scopus citations

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

Keywords

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

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Securities law expertise and corporate disclosure'. Together they form a unique fingerprint.

  • Cite this