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  • August 2017
  • Article
  • Journal of Accounting & Economics

Is the SEC Captured? Evidence from Comment-Letter Reviews

By: Jonas Heese, Mozaffar Khan and Karthik Ramanna
  • Format:Print
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Abstract

SEC oversight of publicly listed firms ranges from comment letter (CL) reviews of firms’ reporting compliance to pursuing enforcement actions against violators. Prior literature finds that firm political connections (PC) negatively predict enforcement actions, inferring SEC capture. We present new evidence that firm PC positively predict CL reviews and substantive characteristics of such reviews, including the number of issues evaluated and the seniority of SEC staff involved. These results, robust to identification concerns, are inconsistent with SEC capture and indicate a more nuanced relation between firm PC and SEC oversight than previously suggested.

Keywords

Comment Letters; Political Connections; Regulatory Capture; SEC Enforcement; Government Administration; Business and Government Relations; Government and Politics

Citation

Heese, Jonas, Mozaffar Khan, and Karthik Ramanna. "Is the SEC Captured? Evidence from Comment-Letter Reviews." Journal of Accounting & Economics 64, no. 1 (August 2017). (Revised June 2017.)
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About The Author

Jonas Heese

Accounting and Management
→More Publications

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More from the Authors
  • Managing EPS at Stanley Black & Decker? By: Jonas Heese, Joseph Pacelli, Yuan Zou and James Barnett
  • Enterprise Resource Planning (ERP) System Implementations and Corporate Misconduct By: Jonas Heese and Joseph Pacelli
  • Human Bias in the Oversight of Firms: Evidence from Workplace Safety Violations By: Jonas Heese, Gerardo Pérez Cavazos and Andreya Pérez Silva
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