The SEC’s Use of Voluntary Disclosure for the Oversight of Mandatory Disclosure

We provide evidence that SEC reviewers reference firms’ earnings conference calls in their oversight of annual report filings. We explore the human capital factors and review process characteristics that underlie reviewers’ decisions to reference content from earnings calls in comment letters. We find that first-reviewer characteristics (i.e., gender, job designation, and experience in monitoring the focal firm), and review team characteristics (i.e., size, gender and job designation shares, continuity, and diversity) are significantly correlated with the likelihood of reviewers referencing earnings calls in their letters. We also document that warning signs arising before and during a comment letter conversation further explain reviewers’ decisions to reference earnings calls in their letters. Finally, we show that referencing calls in annual report comment letters is associated with some unintended consequences, including commented firms reducing future earnings call disclosures and withholding new specific information.