From founders to heirs: the impact of family ownership on SEC comment letters
研究了家族企业与非家族企业收到SEC 10-K评论信的可能性差异，发现家族企业更易收到评论信但修复成本更低，且继承人控制的企业是主要驱动因素。
Purpose This paper examines the association between family firms and SEC comment letters, addressing a significant gap in the literature. Our inquiry is motivated by the argument that SEC comment letters offer insights about financial reporting quality as assessed by a regulator. Hence, whether family firms exhibit higher or lower financial reporting quality should be observed through the number of comment letters received, the extent of issues received in the comment letters and the remediation costs of comment letters. Design/methodology/approach Using a large dataset of US publicly listed firms between 2004 and 2018, we examine whether family firms are more or less likely to receive SEC 10-K comment letters compared to non-family firms. Findings We find that compared to non-family firms, family firms are significantly associated with the propensity of receiving SEC 10-K comment letters. We also show that family firms are associated with lower remediation costs. Finally, we show that among family firms, firms that are controlled by heirs rather than founders are driving the positive association between family firms and comment letters. Practical implications Our findings have important implications for regulators, investors and family firms themselves, offering a better understanding of how ownership structures influence financial reporting quality and regulatory outcomes. Originality/value While previous studies have documented factors affecting the probability of receiving 10-K comment letters, the extent of comments received and the cost of remediation, the influence of ownership structures on these variables remains underexplored. Understanding how family ownership impacts the propensity of receiving SEC comment letters is critical due to the unique characteristics and significant presence of family firms in the market.