TY - JOUR
T1 - To Comply or Not to Comply
T2 - Understanding the Discretion in Reporting Public Float and SEC Regulations
AU - Gao, Feng
N1 - Publisher Copyright:
© CAAA
PY - 2016
Y1 - 2016
N2 - This paper documents how firms exercise discretion in defining affiliates and reporting public float in response to Securities and Exchange Commission regulations. I find that firms with higher expected compliance costs under section 404 of the Sarbanes-Oxley Act of 2002 tend to classify more shares as affiliated and report lower public float. In contrast, firms issuing seasoned equity are less likely to underreport public float, possibly due to favorable regulatory treatment for large issuers. These incentives are weakened when future regulatory changes render float less important.
AB - This paper documents how firms exercise discretion in defining affiliates and reporting public float in response to Securities and Exchange Commission regulations. I find that firms with higher expected compliance costs under section 404 of the Sarbanes-Oxley Act of 2002 tend to classify more shares as affiliated and report lower public float. In contrast, firms issuing seasoned equity are less likely to underreport public float, possibly due to favorable regulatory treatment for large issuers. These incentives are weakened when future regulatory changes render float less important.
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U2 - 10.1111/1911-3846.12170
DO - 10.1111/1911-3846.12170
M3 - Article
AN - SCOPUS:84945334321
VL - 33
SP - 1075
EP - 1100
JO - Contemporary Accounting Research
JF - Contemporary Accounting Research
SN - 0823-9150
IS - 3
ER -