Earnings Conference Calls and the SEC Comment Letter Process

The Securities and Exchange Commission (SEC) reviews firms’ financial reports and issues comment letters to ensure compliance with applicable disclosure and accounting requirements. We explore the nature, determinants, and consequences of SEC comment letters that refer to information disclosed in voluntary earnings conference calls. Using hand-collected data, we document that the SEC primarily references these voluntary disclosures to illustrate insufficiencies and, less commonly, inconsistencies in mandatory filings across a wide range of topics. These letters are more likely to be issued when filing reviews are more complex, SEC staff are less resource constrained, and for firms with more institutional investors and analysts. Conference call-related comments tend to occur during higher-quality review processes and require greater remediation costs than other comments. The SEC’s use of call disclosures also leads to more pronounced changes in firms’ subsequent mandatory filings, particularly when the firm indicates agreement with SEC comments. However, we observe a mixed effect on the overall information environment, consistent with possible unintended consequences for the quality of firms’ voluntary disclosures