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

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.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Accountancy

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2019

Author dc:creator

• Gale, Brian Thomas

Contributors dc:contributor

• Elliott, W. Brooke
• Brown, Nerissa
• Hobson, Jessen
• White, Tiffany
• Williamson, Michael

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

Statement dc:rights

• Copyright 2019 Brian Gale

Language dc:language

en

Handle dc:identifier

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

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/105164