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      Is the SEC Captured? Evidence from Comment-Letter Reviews
      26 Apr 2017Working Paper Summaries

      Is the SEC Captured? Evidence from Comment-Letter Reviews

      by Jonas Heese, Mozaffar Khan, and Karthik Ramanna
      Evidence from analysis of comment-letter reviews suggests a nuanced relation between politically connected firms and oversight by the Securities and Exchange Commission. SEC capture, if it exists, may be less blatant or pronounced than previously thought.
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      Author 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.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: April 2017
      • HBS Working Paper Number: HBS Working Paper #17-087
      • Faculty Unit(s): Accounting and Management
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      Jonas Heese
      Jonas Heese
      Associate Professor of Business Administration
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