The Effect of SEC Reviewers on Comment Letters*

Matthew Baugh, Kyonghee Kim, Kwang J. Lee

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


Prior research suggests that even for the same decision task there will be variation in decision outcomes across decision makers due to idiosyncrasies in their styles. This variation brings up a fundamental challenge in the realm of regulations, where consistency of application is of great importance. This study examines whether the idiosyncrasies of individual employees of the SEC contribute to inconsistent regulatory outcomes. Using a sample of SEC comment letters, we show that SEC reviewers' idiosyncratic style plays a significant role in explaining the cross-sectional variation in filing review outcomes, even after holding firm and disclosure attributes constant. In addition, the likelihood of restatement during the review process varies systemically with the reviewers' review style. These findings suggest that reviewer style influences shareholders and other stakeholders via its impact on the costs in resolving comment letter issues and the quality of corporate disclosure. They also have public policy implications for the way financial reporting rules and regulations are applied.

Original languageEnglish (US)
Pages (from-to)656-690
Number of pages35
JournalContemporary Accounting Research
Issue number1
StatePublished - Mar 1 2022


  • SEC reviewers
  • comment letters
  • disclosure quality
  • regulatory consistency
  • restatements
  • reviewer style

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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