SEC Enforcement: Does Forthright Disclosure and Cooperation Really Matter?

55 Pages Posted: 15 Jul 2010 Last revised: 29 Jun 2011

See all articles by Rebecca Files

Rebecca Files

University of Texas at Dallas

Multiple version iconThere are 2 versions of this paper

Date Written: June 28, 2011


This study examines the conditions under which the Securities and Exchange Commission (SEC) exercises enforcement leniency following a restatement. I explore whether cooperation with SEC staff and forthright disclosure of a restatement (e.g., disclosures reported in a timely and visible manner) reduce the likelihood of an SEC sanction or SEC monetary penalties. After controlling for restatement severity, I find that cooperation increases the likelihood of being sanctioned, perhaps because it improves the SEC’s ability to build a successful case against the firm. However, cooperation and forthright disclosures are rewarded by the SEC through lower monetary penalties.

Keywords: SEC enforcement actions, accounting restatements, cooperation, voluntary disclosure, press release prominence, AAERs, investigations

JEL Classification: G18, G38, K42, M41

Suggested Citation

Files, Rebecca, SEC Enforcement: Does Forthright Disclosure and Cooperation Really Matter? (June 28, 2011). Available at SSRN: or

Rebecca Files (Contact Author)

University of Texas at Dallas ( email )

800 West Campbell Road, SM 41
Richardson, TX 75080-3021
United States
9728835818 (Phone)

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