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| Author: | Kedia, S. Rajgopal, S. |
| Title: | Do the SEC's enforcement preferences affect corporate misconduct? |
| Journal: | Journal of Accounting & Economics
2011 : APR, VOL. 51:3, p. 259-278 |
| Index terms: | USA companies regulations fraud |
| Freeterms: | information asymmetry enforcement restatement distance |
| Language: | eng |
| Abstract: | The efficacy of the the Securities and Exchange Commission's (SEC) enforcement (herein as: enft.) program has been questioned due to recent frauds. This paper hypothesizes that differences in firms' information sets about SEC enft. and constraints facing the SEC affect firms' tendency to adopt aggressive accounting practices. It is found that firms located closer to the SEC and in areas with greater past SEC enft. activity, both proxies for firms' information about SEC enft., are less likely to restate their financial statements. Consistent with the resource-constrained SEC view, the SEC is more likely to investigate firms located closer to its offices. The results suggest that regulation is most effective when it is local. |
SCIMA