Premium
Disclosure characteristics of firms being investigated by the SEC
Author(s) -
Demaline Christopher J.
Publication year - 2019
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.22412
Subject(s) - wrongdoing , accounting , commission , blame , business , finance , psychology , political science , law , social psychology
The purpose of this study is to explore the characteristics of managers' 10‐K disclosures concerning U.S. Securities and Exchange Commission (SEC) investigations. This study examined the quantitative linguistic characteristics of 171 company disclosures discussing the firms' involvement in an SEC investigation related to fraudulent financial reporting. The results suggest that these disclosures have a relatively negative sentiment and were relatively difficult to read. The results failed to provide sufficient statistical evidence to support the notion that managers systematically attempt to blame external parties for the potential wrongdoing and related investigation. The study results add to the stream of research related to impression management in corporate disclosures while also supplementing research on how companies respond to negative events such as regulatory investigations. This study may be of interest to financial regulators, investors, and accounting standards setters, all of whom are interested in maximizing the usefulness of financial information.