How review ambiguity and access costs of SEC review correspondence affect investor judgments

Gale, Brian Thomas

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https://hdl.handle.net/2142/105164 Copy

Description

Title

How review ambiguity and access costs of SEC review correspondence affect investor judgments

Author(s)

Gale, Brian Thomas

Issue Date

2019-04-08

Director of Research (if dissertation) or Advisor (if thesis)

Elliott, W. Brooke

Doctoral Committee Chair(s)

Elliott, W. Brooke

Committee Member(s)

• Brown, Nerissa
• Hobson, Jessen
• White, Tiffany
• Williamson, Michael

Department of Study

Accountancy

Discipline

Accountancy

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• review ambiguity
• access costs
• review correspondence
• information processing
• willingness to invest
• reporting quality

Abstract

Review correspondence between the SEC and firms is a potentially valuable resource for investors. Review correspondence often reveals information about firms’ financial reporting quality, which has important implications for investors’ processing of financial information and investment judgments. However, there is little evidence on how characteristics of review correspondence influence investors’ decision processes. Drawing on psychology theory, I predict that two key informational characteristics—review ambiguity (i.e., a lack of transparency about outcomes from the SEC’s review process) and access costs (i.e., the amount of effort required to access review correspondence)—jointly influence investors’ information processing and their resulting investment judgments. Results show that investors integrate information to a greater extent as review ambiguity decreases, but only when access costs are relatively low. Review ambiguity has no effect on investors’ integration of review correspondence information when access costs are relatively high. Further, review ambiguity and access costs also jointly affect investors’ resulting investment judgments. My results provide important new insights on potential costs to investors from the extent of SEC transparency during its review process, particularly as information becomes more easily accessible.

Graduation Semester

2019-05

Type of Resource

text

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http://hdl.handle.net/2142/105164

Copyright and License Information

Copyright 2019 Brian Gale

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