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Victor Valdivia
''Evaluating the SEC Review of Commercial Banks: Evidence from Comment Letters ''
( 2010, Vol. 30 No.1 )
This paper examines whether the oversight provided by the SEC over commercial banks was appropriate in the period immediately preceding the end of the recent real-estate boom. The approach followed here is to first identify the variables that are of interest to those who invest in banks, and then to present evidence from comment letters to identify the areas in which the SEC actually focuses on . These two results are then compared to determine if the SEC's review efforts are aligned with the interests of bank investors. The results are mixed: in some instances the SEC focuses on the same areas as investors, but in other cases it does not – either because the SEC does not focus on areas of interest to investors, or because the SEC focuses in areas that are of questionable or no interest to investors. Even in cases in which the SEC and investors' interests are aligned, however, investors would benefit from enhanced disclosures. Overall, the paper suggests specific improvements to the SEC review process by identifying areas in which the SEC should focus on, and by suggesting areas of improved disclosure. Finally, this paper also examines the attributes of banks that generated issues upon SEC review.
Keywords: Securities and Exchange Commission, SEC, Financial Reporting, Annual Reports, 10K, Commercial Banks, Banking, Regulation.
JEL: L5 - Regulation and Industrial Policy: General
M4 - Accounting and Auditing: General
Manuscript Received : Jun 21 2009 Manuscript Accepted : Jan 17 2010

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