Earnings Conference Calls and the SEC Comment Letter Process

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Authors: Alina Lerman, Thomas D. Steffen, Kangkang Zhang
Cited by: 1
References: 72

Abstract

The Securities and Exchange Commission (SEC) reviews firms’ financial reports and issues comment letters to ensure compliance with applicable disclosure and accounting requirements. We explore the nature, determinants, and consequences of SEC comment letters that refer to information disclosed in voluntary earnings conference calls. Using hand-collected data, we document that the SEC primarily references these voluntary disclosures to illustrate insufficiencies and, less commonly, inconsistencies in mandatory filings across a wide range of topics. These letters are more likely to be issued when filing reviews are more complex, SEC staff are less resource constrained, and for firms with more institutional investors and analysts. Conference call–related comments tend to occur during higher-quality review processes and require greater remediation costs than other comments. The SEC’s use of call disclosures also leads to more pronounced changes in firms’ subsequent mandatory filings, particularly when the firm indicates agreement with SEC comments. However, we observe a mixed effect on the overall information environment, consistent with possible unintended consequences for the quality of firms’ voluntary disclosures. This paper was accepted by Suraj Srinivasan, accounting. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.02065 .

Fields of Study & Subjects

Auditing Earnings Management Governance Accounting Education and Careers Financial Reporting and XBRL

Publication details

Journal / source
Management Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Publication date
30 January 2026
Language
EN