Textual classification of SEC comment letters

• 成果类型: Article
• 署名作者: Ryans, James P.
• 署名单位: University of London; London Business School
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-020-09565-6
• 发表日期: 2021
• 页码: 37-80
• 关键词: cross-sectional determinants; earnings announcement drift; information-content; disclosure; MARKET; ANALYST; cost; RESTATEMENTS; CONSEQUENCES; persistence

摘要

This study examines the impact of SEC comment letters on future financial reporting outcomes and earnings credibility. Naive Bayesian classification identifies comment letters associated with future restatements and write-downs. An investor attention-based quantitative measure of importance, using EDGAR downloads, also predicts these outcomes. Disclosure-event abnormal returns, revenue recognition comments, and the number of letters in a conversation appear to be useful quantitative metrics for classifying importance in certain settings. This study also documents trends in comment letter topics over time and identifies topics associated with the textual and quantitative classifications of importance, providing insights into the factors that draw investor attention and that relate to future restatements and write-downs. Innocuous comment letters are associated with improvements in earnings credibility following comment letter reviews.