Melbourne Accounting Research Seminar - Cheng (Colin) Zeng

Associate Professor Cheng (Colin) Zeng from the Hong Kong Polytechnic University will present a MARS seminar.

Topic:  

From Customer to Watchdog: SEC Procurement and Oversight Spillovers Across Industry Peers

Abstract: 

We examine whether the commercial role of the Securities and Exchange Commission (SEC) as a government customer shapes its financial reporting oversight. Using SEC procurement awards and comment-letter data from 2005 to 2023, we find that SEC procurement from a focal firm’s industry peers is associated with more intensive and timelier SEC reviews of the focal firm, particularly for industry benchmarking, revenue recognition, and expense-related issues. The effect is stronger for high-information government contracts, more comparable peers, industry office assignment changes, cross-listed firms, reviewers with stronger internal networks, and geographically proximate procurement. Overall, our findings suggest that the SEC’s role as customer can expand its industry information set and shape oversight of peer firms.