Transparency and the (E)valuation of Asset-Backed Securities

By Jed J. Neilson, Stephen G. Ryan, K. Philip Wang and Biqin Xie December 13, 2018 by renholding

In 2011, the commission appointed by Congress to investigate the causes of the financial crisis concluded that “a combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis” (The …

SEC Commissioner Discusses Improving Information for Investors in the Digital Age

By Kara M. Stein October 26, 2018 by renholding

I last spoke to you in May 2014 about “Building Momentum.”[1] At the time, I was a rookie Commissioner. Now, I stand before you after five years as a Commissioner and over 5,700 votes under my belt. It has

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Financial Misconduct and Strategic Corporate Disclosures

By Rebecca Files, Alex Holcomb, Gerald S. Martin and Paul Mason October 9, 2018 by renholding

Financial misconduct can lead to significant financial and reputational penalties for a firm and its managers, including hefty fines from regulators and steep drops in stock price. In fact, recent research finds that firms accused of fraud lose an average …

SEC’s Co-Director of Enforcement Talks About Her Division’s Impact

By Stephanie Avakian September 21, 2018 by renholding

My speech today [1] happens to fall a little less than two weeks before the close of Steve Peikin’s and my first full fiscal year as Co-Directors of the SEC’s Division of Enforcement. In many respects, a year is an

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How Credit Default Swaps Affect Managers’ Voluntary Disclosure

By Jae B. Kim, Pervin K. Shroff, Dushyantkumar Vyas and Regina Wittenberg Moerman September 17, 2018 by renholding

Credit Default Swaps (CDSs) enable lenders to distribute credit risk to parties more willing and able to bear it, thereby enhancing the liquidity and flexibility of individual lenders and the financial system (Greenspan 2004). However, empirical evidence suggests that CDSs …

Do Investors Care Who Did the Audit?

By Marcus M. Doxey, James G. Lawson, Thomas J. Lopez and Quinn T. Swanquist September 14, 2018 by renholding

In 2008, the U.S. Department of the Treasury’s Advisory Committee on the Auditing Profession called for a “standard-setting initiative to consider mandating the engagement partner’s signature on the auditor’s report” as a way to increase audit transparency.[1] The Public …

Disclosure Regulation in the Commercial Banking Industry: Lessons from the National Banking Era

By João Granja September 12, 2018 by renholding

In the aftermath of the 2007—2009 financial crisis, policymakers around the globe responded to calls for greater transparency in the financial system by adopting new rules and institutions that required more and better information disclosure by financial institutions. For example, …

Making Sustainability Disclosure Sustainable

By Jill E. Fisch September 10, 2018 by renholding

Issuers, investors, and regulators are paying increasing attention to corporate sustainability. Commentators have proffered a variety of explanations for this attention ranging from the argument that corporations are morally obligated to act in a socially responsible manner to the claim …

Insider Trading Ahead of Cyber Breach Announcements

By Zhaoxin Lin, Travis R.A. Sapp, Jackie Rees Ulmer and Rahul Parsa September 4, 2018 by renholding

On March 14, 2018, the Securities and Exchange Commission charged a former chief information officer of Equifax with insider trading. The complaint alleged that he profited from selling stock ahead of the September 2017 public announcement of a major cybersecurity …

How Patents’ Disclosure Role Can Ease Market Uncertainty

By Ali Mohammadi, Mehdi Beyhaghi and Pooyan Khashabi August 31, 2018 by renholding

In addition to providing legal protection, patents serve a disclosure function aimed chiefly at inventors and technology customers. However, the effect of this disclosure on capital markets has been left largely unexamined in the literature, creating a gap in understanding …

SEC Chair Clayton Talks Capital Formation

By Jay Clayton August 30, 2018 by renholding

I am delighted to participate in the 36|86 Entrepreneurship Festival here in Nashville, Tennessee. I would like to speak for about 25 minutes about key capital formation initiatives at the SEC.[1] After my remarks, I will be joined by

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What Really Drives “Short-Termism”?

By John C. Coffee, Jr. August 27, 2018 by renholding

Earlier this month, the CEO of Pepsi Co. suggested to President Trump that eliminating quarterly reporting (and shifting to biannual reporting) would reduce the pressure on managers to focus on the short-term. As impulsive as Elon Musk, the president bought …

Thinking Holistically Before Dropping Quarterly Reporting

By James D. Cox August 27, 2018 by renholding

Robust capital markets are widely believed to signal economic vitality, and a reliable barometer of such vitality was historically a rising number of IPOs and listings. Yet, as we are experiencing record setting economic expansion, that barometer has failed us. …

Financial Reporting Frequency

By Donald C. Langevoort August 27, 2018 by renholding

I should be a prime candidate to support the lengthening of the financial reporting cycle from three to six months, as the White House—and many others—now say they want the SEC to do. I want public corporations to be more …

Quarterly Reporting and Market Liquidity

By Joshua R. Mitts August 27, 2018 by renholding

Trading in U.S. equity markets is fast and cheap. While proponents of ending quarterly reporting point to the dangers of short-termism, less frequent disclosure is also likely to lead to a decline in liquidity and to greater trading costs. The …

Cutting Disclosure Frequency Is the Wrong Solution to the Wrong Problem

By Charles K. Whitehead August 27, 2018 by renholding

President Trump has directed the Securities and Exchange Commission to study whether a public company’s reporting requirements should shift from a quarterly to semi-annual schedule. Doing so, according to the president, “would make business (jobs) even better in the U.S.” …

Voluntary Disclosure and Firm Visibility: Evidence from Initial Public Offerings

By Michael Dambra, Bryce Schonberger and Charles Wasley August 23, 2018 by renholding

Legal academics and practitioners have long emphasized the important role that disclosure plays in the initial public offering (IPO) process. Issuers and their underwriters provide information via a prospectus and corresponding IPO roadshow to mitigate the information gap between the …

How the Level of Blame Affects Companies’ Willingness to Disclose

By Jason D. Schloetzer, AyungTseng, Teri Lombardi Yohn and Yeo Sang Yoon August 21, 2018 by renholding

What motivates a firm to disclose information rather than remain silent following a material, negative economic event? For example, why did oil companies issue multiple, detailed disclosures about oil spills caused by Hurricane Katrina and Hurricane Rita but not disclose …

Do Financial Analysts Help Improve Firm Productivity?

By Marco Navone, Eliza Wu and Thomas To August 7, 2018 by renholding

Academic researchers in corporate finance have in recent years taken a renewed interest in the impact of private firms on employment, growth, and other positive developments in national economies. In a recent article, we develop this new field of research …

Is Silence Golden? Negative Effects of Mandatory Disclosure

By Sudarshan Jayaraman and Joanna S. Wu July 30, 2018 by renholding

“When you talk, you are only repeating what you already know. But if you listen, you may learn something new.” – Dalai Lama XIV

Disclosure regulation is a cornerstone of modern securities markets. Its economic consequences have been extensively studied …

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