The Impact of Chief Financial Officers’ Financial Expertise on Securities and Exchange Commission Comment Letters

48 Pages Posted: 25 Apr 2018

See all articles by Soo Young Kwon

Soo Young Kwon

Korea University

Jee-Hae Lim

University of Hawaii, Manoa

Jongwon Park

Hong Kong Polytechnic University

Date Written: Jan 17, 2019

Abstract

In this study, we explore the expanded role of chief financial officers (CFOs) in facilitating corporate disclosure by examining how they involve in resolving Securities and Exchange Commission (SEC) comment letters issued on 10-K reports. We find that CFOs are more likely to be involved in the resolution process when the comment letter raises concern on accounting and disclosure related issues. We also document that CFOs’ financial expertise exercised during the process leads to more effective resolution of SEC’s comments. In addition, we provide evidence that the resolution of comment letter improves investors’ perceptions on earnings, particularly when CFOs’ financial expertise is involved in the resolution process. Considered together, this study highlights the importance of CFOs’ role and function in regulatory compliance.

Keywords: CFOs, Financial Expertise, Accounting Rules, Disclosure Issues, SEC Comment Letters, Earnings Response Coefficient (ERC)

JEL Classification: G14, G30, M40, M41, M48

Suggested Citation

Kwon, Soo Young and Lim, Jee-Hae and Park, Jongwon, The Impact of Chief Financial Officers’ Financial Expertise on Securities and Exchange Commission Comment Letters (Jan 17, 2019). Available at SSRN: https://ssrn.com/abstract=

Soo Young Kwon (Contact Author)

Korea University ( email )

#601 LG-POSCO Hall KUBS
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Seoul, 02841
Korea, Republic of (South Korea)
+82-2-3290-1937 (Phone)

Jee-Hae Lim

University of Hawaii, Manoa ( email )

2404 Maile Way
Honolulu, HI Honolulu 96822
United States
(808) 956-8503 (Phone)
(808) 956-9888 (Fax)

HOME PAGE: http://shidler.hawaii.edu/directory/jee-hae-lim/soa

Jongwon Park

Hong Kong Polytechnic University ( email )

Hong Kong
+85227667161 (Phone)

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