Is the SEC captured? Evidence from comment-letter reviews
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CitationHeese, Jonas, Mozaffar Khan, and Karthik Ramanna. "Is the SEC Captured? Evidence from Comment-Letter Reviews." Harvard Business School Working Paper, No. 17-087, April 2017. (Revised June 2017; forthcoming at the Journal of Accounting & Economics.)
AbstractSEC 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.
Citable link to this pagehttp://nrs.harvard.edu/urn-3:HUL.InstRepos:33111777
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