SYNOPSIS
Over 1,600 firms exempt from registration requirements have voluntarily filed with the SEC at some point in the last two decades. We investigate whether the SEC scrutinizes these voluntary filings to a similar degree as those submitted by mandatory filers. Our findings suggest a lower likelihood of SEC review for voluntary filers, on average. We identify several factors, however, that help mitigate concerns regarding the overall quality of voluntary filers’ regulatory oversight. First, financial statements and related disclosures are reviewed just as frequently for voluntary filers as for mandatory filers. Second, conditional on a comment letter being issued, the comment letter process is similarly rigorous for both groups. Finally, voluntary filers do not significantly differ from mandatory filers in the likelihood of an accounting restatement. Our results suggest the SEC monitors voluntary filers differently from mandatory filers, but that this monitoring is sufficient to promote comparable financial reporting quality.
