Styles of Regulators: Evidence from the SEC 's Comment Letters†

The Public Company Accounting Oversight Board (PCAOB; Board) maintains that constituent feedback plays an essential and dynamic role in its audit standard-setting process. We examine a major source of constituent feedback, responses to standard-setting questions, using a sample drawn from the original proposals of fourteen PCAOB auditing standards. We find that after receiving comment letter feedback to the standard-setting questions, the Board revises approximately half of its guidance tied to those questions before it finalizes auditing standards-a finding consistent with the Board's assertion that it carefully considers constituent perspectives as it develops new regulation. We also explore the related comment letters of eight professional auditing firms subject to the PCAOB's annual inspection program and discover varying levels of opposition to and support for the PCAOB's proposed authoritative guidance. We observe PCAOB revision to authoritative guidance highly contested by the firms in more than three-fourths of cases of standard-setting questions and PCAOB non-revision to guidance highly supported by the firms in more than ninety percent of cases.

Download Full-text

Regulatory transparency and the alignment of private and public enforcement: Evidence from the public disclosure of SEC comment letters

Journal of Financial Economics ◽

10.1016/j.jfineco.2021.07.011 ◽

2021 ◽

Author(s):

Amy Hutton ◽

Susan Shu ◽

Xin Zheng

Keyword(s):

Public Disclosure ◽

Public Enforcement ◽

The Public ◽

Private And Public ◽

Comment Letters

Download Full-text

How Busyness Influences SEC Compliance Activities: Evidence from the Filing Review Process and Comment Letters

SSRN Electronic Journal ◽

10.2139/ssrn.3131201 ◽

2018 ◽

Cited By ~ 4

Author(s):

Katherine Gunny ◽

Judith Hermis

Keyword(s):

Review Process ◽

Comment Letters

Download Full-text

External Legal Counsel and the SEC M&A Comment Letters

SSRN Electronic Journal ◽

10.2139/ssrn.3906719 ◽

2021 ◽

Author(s):

Pawel Bilinski ◽

Ivana Raonic ◽

Junzi Zhang

Keyword(s):

Legal Counsel ◽

Comment Letters

Download Full-text

SEC Comment Letters: An Unlikely Secret Weapon for Forensic Accountants, Short Sellers, and Other Financial Statement Users

SSRN Electronic Journal ◽

10.2139/ssrn.2705877 ◽

2015 ◽

Cited By ~ 3

Author(s):

Hugh Grove ◽

Tomajean Johnsen ◽

Pei Lung

Keyword(s):

Financial Statement ◽

Short Sellers ◽

Comment Letters

Download Full-text

The Effects of Regulatory Scrutiny on Tax Avoidance: An Examination of SEC Comment Letters

The Accounting Review ◽

10.2308/accr-51433 ◽

2016 ◽

Vol 91 (6) ◽

pp. 1751-1780 ◽

Cited By ~ 70

Author(s):

Thomas R. Kubick ◽

Daniel P. Lynch ◽

Michael A. Mayberry ◽

Thomas C. Omer

Keyword(s):

Indirect Effect ◽

Avoidance Behavior ◽

Tax Avoidance ◽

Regulatory Scrutiny ◽

Comment Letters ◽

To Receive ◽

Tax Costs

ABSTRACT This study examines the tax avoidance behavior of firms prior to the issuance, and following the resolution, of SEC tax comment letters. We find that firms that appear to engage in greater tax avoidance are more likely to receive a tax-related SEC comment letter. We also find that firms receiving a tax-related SEC comment letter, relative to firms receiving a non-tax comment letter, subsequently decrease their tax avoidance behavior consistent with an increase in expected tax costs. Additionally, we document evidence consistent with other firms that do not receive a comment letter reacting to multiple publicly disclosed tax-related comment letters within their industry by increasing their reported GAAP ETR, consistent with an indirect effect of regulatory scrutiny on certain types of tax avoidance.

Download Full-text