Tsai, Y. C. 1995. Section 155 Security Exchang Act and SEC Filing Lags. NTU Management Review, 6 (1): 025-042
Yann-ching Tsai, Institute of Accounting, National Taiwan University, Taiwan, R.O.C.
Abstract
The main purpose of the Section 155 of the Security Exchange Act (SEA) was set to curb price manipulation. This paper examines SEC filing lags of firms with insiders violating the Section 155 of SEA. All the cases involving violation of Section 155 are of the following two types: (1)collective action by most board of directors and top managers, and (2)violation by the most influential character of the firm. Consequently, I hypothesize that those people, who have been penalized by courts for violation of Section 155, have incentive and ability to manage earnings and to delay public announcement of annual reports. This implies that those firms would have longer SEC filing lags. Since the data of the filing lags are right consored, the OLS estimates used in the past research are biased. I apply duration model to correct for this bias. The empirical evidence shows that the filings would be longer for (2)small firms, (2)firms with bad news, (3)firms report extraordinary items, (4)firms switch auditors. Also, the findings support my hypothesis that those firms involved in violation of Section 155 have longer filing lags.
Keywords
Security Exchange Act Financial reporting lag Duration model