CEO Accounting Background and SEC Comment Letters

• In Event: Break with Research and Education Poster Forum

Abstract

To improve the disclosure quality of companies, the SEC periodically reviews the filings of all public companies and issues comment letters to companies whose filings are determined to be deficient in some way. This study investigates the association between CEO accounting background and the likelihood of receiving comment letters. We collected comment letters data from the EDGAR database. By controlling for firms characteristics, audit quality, and other common corporate governance variables, this study finds that (i) CEO accounting background is negatively associated with the likelihood of receiving SEC comment letters, and (ii) when firm executives are accounting experts, firms’ response time for the resolution of comment letter is shorter. Furthermore, CEO accounting background mitigates the receipts of accounting rule violation comment. The evidence about CEO characteristics and comment letters might provide political implications for the SEC publicly releasing comment letters and the correspondence from 2005.

Author

• Yu-Chun Lin, National Changhua University of Education