Type of Document	Dissertation
Author	Edmonds, Jennifer Echols
URN	etd-12212011-170804
Title	An Investigation of the Effectiveness of the Division of Corporate Finance as a Monitor of Financial Reporting
Degree	PhD
Department	Accounting and Information Systems
Advisory Committee	Advisor Name Title Cloyd, C. Bryan Committee Chair Brown, Robert M. Committee Member Hansen, T. Bowe Committee Member Maher, John J. Committee Member Mansi, Sattar A. Committee Member
Keywords	Disclosure Quality Forward Earnings Response Coefficient Comment Letters
Date of Defense	2011-12-14
Availability	restricted
Abstract This study uses the Securities and Exchange Commission’s (SEC) comment letters to investigate the SEC’s role as a monitor of financial reporting. I examine whether the SEC effectively comments on firms with poor disclosure quality. I utilize forward earnings response coefficients (FERC) as a measure of the market’s perception of disclosure quality. I expect comment letter firms to have lower disclosure quality and thus lower FERCs. Secondly, within the firms selected for comment, I investigate whether the Division allocates a greater amount of resources towards firms with more severe disclosure deficiencies. Results indicate that comment letter recipients have significantly lower forward earnings response coefficients than non- recipients. Results also document that comment letter recipients have lower contemporaneous earnings response coefficients than non-recipients. These findings are consistent with the DCF being effective in selecting firms that are perceived by the market as having low disclosure and earnings quality. However, within comment letter firms, I am unable to provide any evidence that the DCF allocates more resources to firms with lower forward earnings response coefficients.
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