Is the SEC Captured? Evidence from Comment-Letter Reviews

Jonas Heese (), Mozaffar Khan () and Karthik Ramanna ()
Additional contact information
Jonas Heese: Harvard Business School, Accounting and Management Unit
Mozaffar Khan: University of Minnesota
Karthik Ramanna: Oxford University

No 17-087, Harvard Business School Working Papers from Harvard Business School

Abstract: SEC oversight of publicly listed firms ranges from comment letter (CL) reviews of firms' reporting compliance to pursuing enforcement actions against violators. Prior literature finds that firm political connections (PC) negatively predict enforcement actions, inferring SEC capture. We present new evidence that firm PC positively predict CL reviews and substantive characteristics of such reviews, including the number of issues evaluated and the seniority of SEC staff involved. These results, robust to identification concerns, are inconsistent with SEC capture and indicate a more nuanced relation between firm PC and SEC oversight than previously suggested.

Keywords: comment letters; political connections; regulatory capture; SEC enforcement (search for similar items in EconPapers)
JEL-codes: D72 G18 M41 M48 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2017-04
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Citations: View citations in EconPapers (43)

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Persistent link: https://EconPapers.repec.org/RePEc:hbs:wpaper:17-087

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