An Analysis of Comment Letter Responses to the U.S. SEC Disclosure Update and Simplification Release (DUSTR)

• In Event: Social Media and Trends in Accounting Research

Abstract

This paper outlines proposed reforms to the securities registrant reporting framework currently under consideration by the United States Securities and Exchange Commission (SEC). This work seeks to address the ongoing reformation the American corporate reporting process by analyzing the 68 stakeholder responses to the SEC's 2016 Disclosure Update and Simplification Release (DUSTR), SEC Release No. 33-10110; 34-78310; IC-32175; File No. S7-15-16. This paper then seeks to determine levels of support for the SEC’s proposed reforms, to examine observable differences, if any, among the views of various respondents based on stakeholder groups (e.g., audit and assurance firms, users, preparers, regulators, etc.).

The results of our process demonstrate that levels of stakeholder support for the SEC’s proposed reforms are mixed and levels of support for, or opposition to, DUSTR proposed initiatives are divided between and among stakeholder classification lines. Our results further demonstrate strongest overall support for the streamlining initiative is to be found among reporting companies, as well as auditing and assurance firms. In contrast, the strongest overall opposition to streamlining is to be found among individual and institutional investors, as well as public interest and advocacy groups.

The size and complexity of the DUSTR is impressive. This size and complexity can pose a significant barrier to stakeholder understanding and undermine efforts to obtain a simple understanding of what the SEC intends to do. In turn, these barriers inhibit stakeholders from providing sufficient appropriate and relevant feedback. Accordingly, the size and complexity of the DUSTR, and the barriers to understanding that this size and complexity create, produces a potential policy legitimacy problem facing Release No. 33-10110. As the release may simply be unreachable to many due to size and complexity, many, if not most, may not be capable of providing feedback to the SEC. Without stakeholder feedback, the DUSTR, if and when adopted, could bear the slight of being approved without appropriate and relevant stakeholder feedback.

Authors

• Judy K Beckman, University of Rhode Island

• Patrick M Ryle, University of Rhode Island