SEC Comment Letters and 10-K Accounting and Linguistic Reporting Complexity
研究SEC意见函对10-K报告复杂性的影响，发现意见函降低了会计概念复杂性，但增加了语言复杂性，且语言复杂性增加与管理者故意混淆有关。
The increasing complexity of 10-K reporting has caused difficulties for investors seeking to understand and analyze a company’s financial reports. In this study, we examine whether the SEC’s comment letter process, consistent with its mission to improve public company disclosure, reduces reporting complexity in subsequent filings. We find comment letter receipt has a competing impact on two distinct dimensions of reporting complexity. Specifically, reporting complexity related to accounting concepts decreases after comment letter receipt, but linguistic reporting complexity increases. Validating this competing impact, we find that both changes to complexity are associated with changes in firms’ information asymmetry in the expected directions. Further analysis of the increase in linguistic reporting complexity suggests that managers obfuscate following comment letter receipt, where the increase is unnecessary and not occurring in response to changes in the firms’ accounting or underlying economics/operations. Overall, results suggest that while the comment letter process simplifies the presentation of reported accounting information, it also has the unintended consequence of decreasing the readability of reports. This nuance is important to understand, given that the federal government dedicates significant resources to the comment letter process.