To Comply or Not to Comply: Understanding the Discretion in Reporting Public Float and SEC Regulations

• 成果类型: Article
• 署名作者: Gao, Feng
• 署名单位: Rutgers University System; Rutgers University New Brunswick; Rutgers University Newark
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12170
• 发表日期: 2016
• 页码: 1075-1100
• 关键词: sarbanes-oxley act; internal control weakness; economic consequences; contracting evidence; DISCLOSURES; QUALITY; COSTS; debt

摘要

This paper documents how firms exercise discretion in defining affiliates and reporting public float in response to Securities and Exchange Commission regulations. I find that firms with higher expected compliance costs under section 404 of the Sarbanes-Oxley Act of 2002 tend to classify more shares as affiliated and report lower public float. In contrast, firms issuing seasoned equity are less likely to underreport public float, possibly due to favorable regulatory treatment for large issuers. These incentives are weakened when future regulatory changes render float less important.