Noncompliance with SEC regulations: evidence from timely loan disclosures

Judson Caskey, Kanyuan Huang () and Daniel Saavedra ()
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Kanyuan Huang: UCLA Anderson School of Management
Daniel Saavedra: UCLA Anderson School of Management

Review of Accounting Studies, 2023, vol. 28, issue 1, No 4, 126-163

Abstract: Abstract We use required 8-K filings around major borrowings to shed light on firms’ choices of whether to comply with SEC disclosure rules. Exploiting within-firm variation, we find that firms are more likely to hide loans with high spreads and tight financial covenants. We further find that firms appear to exploit the ambiguity of the definition of materiality, as they are more likely to selectively disclose (hide) “immaterial” loans when interest rates are low (high). Firms are less likely to hide loans when investors anticipate borrowing during asset acquisition, when firms are followed by more equity analysts or receive more investor attention, and when the firms’ stock prices are more volatile. Lastly, we provide evidence that the SEC does not rigorously enforce compliance with 8-K loan disclosures.

Keywords: Disclosure; Bank loans; SEC monitoring; Form 8-K; Materiality (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 H25 H32 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11142-021-09638-0

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