SEC enforcement: Does forthright disclosure and cooperation really matter?

Rebecca Files

Journal of Accounting and Economics, 2012, vol. 53, issue 1, 353-374

Abstract: This study examines the conditions under which the Securities and Exchange Commission (SEC) exercises enforcement leniency following a restatement. I explore whether cooperation with SEC staff and forthright disclosure of a restatement (e.g., disclosures reported in a timely and visible manner) reduce the likelihood of an SEC sanction or SEC monetary penalties. After controlling for restatement severity, I find that cooperation increases the likelihood of being sanctioned, perhaps because it improves the SEC's ability to build a successful case against the firm. However, cooperation and forthright disclosures are rewarded by the SEC through lower monetary penalties.

Keywords: SEC enforcement actions; AAERs; Accounting restatements; Cooperation; Voluntary disclosure (search for similar items in EconPapers)
JEL-codes: G18 G38 K42 M41 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:53:y:2012:i:1:p:353-374

DOI: 10.1016/j.jacceco.2011.06.006

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