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SEC enforcement: Does forthright disclosure and cooperation really matter?

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  • Files, Rebecca
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    Abstract

    This study examines the conditions under which the Securities and Exchange Commission (SEC) exercises enforcement leniency following a restatement. I explore whether cooperation with SEC staff and forthright disclosure of a restatement (e.g., disclosures reported in a timely and visible manner) reduce the likelihood of an SEC sanction or SEC monetary penalties. After controlling for restatement severity, I find that cooperation increases the likelihood of being sanctioned, perhaps because it improves the SEC's ability to build a successful case against the firm. However, cooperation and forthright disclosures are rewarded by the SEC through lower monetary penalties.

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    File URL: http://www.sciencedirect.com/science/article/pii/S016541011100053X
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Accounting and Economics.

    Volume (Year): 53 (2012)
    Issue (Month): 1 ()
    Pages: 353-374

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    Handle: RePEc:eee:jaecon:v:53:y:2012:i:1:p:353-374

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    Web page: http://www.elsevier.com/locate/jae

    Related research

    Keywords: SEC enforcement actions; AAERs; Accounting restatements; Cooperation; Voluntary disclosure;

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    Cited by:
    1. Duong Nguyen & Tribhuvan Puri, 2014. "Information asymmetry and accounting restatement: NYSE-AMEX and NASDAQ evidence," Review of Quantitative Finance and Accounting, Springer, vol. 43(2), pages 211-244, August.

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