• ICOs with trustworthy-looking teams attract significantly more funding. • Facial trustworthiness is unrelated to post-ICO performance, revealing biases. • Individual investors are more prone to biases than institutional investors. • The results highlight the need for regulations in unregulated fundraising markets. Investor protection regulations, such as the Securities and Exchange Commission’s prohibition on general solicitation, aim to prevent individual investors from being misled by marketing. However, their impact on investor behavior remains unclear. This study examines the Initial Coin Offering (ICO) market, an unregulated setting in which issuers freely advertise projects without standardized disclosures. In the absence of reliable financial information, investors may rely on alternative cues, such as ICO team members’ perceived facial trustworthiness. Using machine learning–based proxies, such as smiling, this study finds that ICOs with more trustworthy-looking teams attract significantly more funding. However, this perceived trustworthiness is unrelated to post-ICO performance, suggesting a behavioral bias in investment decisions. The effect is stronger among individual investors and for ICOs in low-trust countries. Together, these findings highlight systematic biases in investor decision-making and underscore the importance of regulations in protecting investors in unregulated markets.

The U.S. Security and Exchange Commission’s (SEC’s) Division of Enforcement is frequently criticized for its ineffective oversight, and certain vocal critics attribute this to a lack of financial experience within the SEC. Using novel hand-collected data on SEC regional directors, I find that most of these senior SEC officials lack practical financial experience. I then use a staggered difference-in-differences research design and find that directors with financial experience open 62% more investigations (i.e., four to five additional investigations per office-year). This result is consistent with their financial experience impacting investigations. Additional analyses reveal that this effect is stronger when financial acumen likely matters more and that financial directors conduct more efficient and consequential investigations. Importantly, these results do not appear to be explained by the experience of other directors or by financial regional directors handling more cases. This study answers recent calls for more research on individual regulators and presents timely evidence as the SEC seeks to improve its investigation process. More generally, these findings provide new insights into the SEC’s oversight process and should be of interest to regulators and market participants concerned with the SEC’s policing of financial misreporting. This paper was accepted by Suraj Srinivasan, accounting. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2024.05302 .

ABSTRACT We investigate how the Securities and Exchange Commission's (SEC) oversight affects the timing and valuation of seasoned equity offerings (SEOs). SEOs receiving an SEC comment letter are associated with longer SEO registration periods. Furthermore, SEOs receiving an SEC comment letter that is publicly disclosed before the offer date are associated with larger offer price discounts. Issuers with poorer information environments are more likely to receive an SEC comment letter. Our findings are consistent with SEC scrutiny resulting in negative information being incorporated into the offer price, but only when the scrutiny is disclosed publicly and promptly.

This study addresses the challenge of high signal-to-noise ratios in financial sentiment analysis by introducing a hybrid, multi-stage AI framework. We combine the high-throughput capabilities of FinBERT with the deep contextual reasoning of Google Gemini to extract actionable intelligence from over 9,000,000 data points, including the U.S. Securities and Exchange Commission (SEC) filings and financial news. By applying our rigorous “Data Funnel” logic, we filter out noise from the massive dataset and surface a small set of high-conviction signals. These signals are executed on a historically dynamic universe of top S&P 500 constituents within a dollar-neutral long/short framework, integrated with macro-regime filters and technical trend confirmation. Our results over a 16-year testing period demonstrate a mean excess return of 51.02% per annum net of transaction costs, while achieving a Sharpe ratio of 1.06 and a Sortino ratio of 2.61. The significant divergence between Sharpe and Sortino ratios highlights the strategy’s positive skewness, effectively capturing upside volatility while limiting downside risk. Statistical robustness is confirmed by a Newey–West adjusted t-statistic of 4.01, indicating that the generated alpha is highly significant. This research provides a proof-of-concept for the use of Large Language Models (LLMs) as qualitative gatekeepers in quantitative finance, effectively bridging the gap between statistical NLP and human-like contextual understanding.

Abstract Transitioning away from fossil fuels is in the best interest for long-term stakeholders of oil firms to mitigate risk from climate policy. Yet firms have an informational and positional advantage over strategies to mitigate climate-related risks, such that there is little incentive to decarbonize. Building on theories of firm behavior and the three faces of political power, we argue that investor pressure will be unlikely to change the climate strategy of fossil fuel firms. To measure climate strategy, we develop a novel technique using natural language processing tools to parse annual filings of all publicly-listed oil firms in the US. Using a difference-in-differences design exploiting an exogenous shock to shareholder power from a Securities and Exchange Commission regulatory amendment, we find no effects of shareholder pressure on deep reforms to climate strategies and weak effects on incremental pro-climate behavior. Through a case study of ExxonMobil, we show that climate-motivated investors are unable to overcome internal stakeholder resistance, despite shareholder pressure through direct communication, filed resolutions, and media campaigns. Our findings illustrate that polluting firms remain resistant to financial pressure for decarbonization, suggesting an important role for policy.

Perhaps the most significant debate in corporate law today is the role of the corporation in society. Do corporations have a responsibility to their employees, local communities, and other non-shareholder constituencies? On one side of the debate, there is a vocal group of critics arguing for a shareholder primacy model of governance focused on maximizing value to shareholders. On the other side, there are corporations embracing stakeholder governance and the consideration of employees, local communities, and other non-shareholder constituencies in the ordinary course of business. Modern corporate governance, however, presents a curious phenomenon: Even the most ardent supporters of stakeholders abandon their longstanding commitments during times of change, such as dealmaking and shifts in governmental power. Thus, this Article examines the question of why corporations that adopted a stakeholder governance approach in the ordinary course abandon their commitments in times of change. As a baseline matter, it analyzes the increased risks during times of change as well as lack of transparency when reneging on prosocial commitments. Notwithstanding widespread criticism of this conduct, the Article argues that such abandonment is not a complete deterioration of stakeholder governance. Rather, it demonstrates that times of change are periods of rearranging priority among those with a stake in the corporation. Each corporation will have implicitly established a hierarchy among these stakeholders in the ordinary course. During times of change there is an implicit rearranging of stakeholder claims on the corporation’s resources, attention, and time. When viewed through the lens of reprioritization of stakeholder claimants, it becomes clear that while there is a decrease overall of stakeholder considerations in times of transition, it is not an eradication entirely. The Article makes three primary contributions to the literature. First, it uses novel, hand-coded data from filings with the Securities and Exchange Commission (SEC) to examine the conflict between stakeholder treatment in the ordinary course and in times of change. Second, it advances a cohesive theory of the drivers of corporate abandonment and uncovers the potential harms of such conduct. Lastly, the Article explores the implications of this analysis on the corporate purpose debate and advances a range of doctrinal and policy proposals, such as increased disclosures, durable contractual commitments, and third-party certifications, to promote transparency and increase accountability in corporate governance.

Purpose This paper aims to evaluate whether US public companies should be required to disclose the number and percentage of shares registered outside the depository trust company’s nominee, Cede & Co. It examines how the growth of directly registered, non-Cede-owned (NCO) shares affects market transparency, float calculation, liquidity assessment and short-selling dynamics. Design/methodology/approach The study analyzes regulatory gaps in existing Securities and Exchange Commission (SEC) disclosure rules, synthesizes issuer-level evidence from recent market episodes and conducts comparative review of transfer-agent practices and state corporate-law inspection rights. It also draws on case studies – including GameStop, AMC, Express, Bed Bath and Beyond, KOSS and Trump Media and Technology Group – to illustrate how undisclosed NCO ownership affects market participants. The paper then proposes targeted amendments to Regulation S-K to standardize reporting of NCO shares. Findings Rising levels of directly registered ownership reveal a structural blind spot in SEC reporting. Because NCO shares are illiquid and unavailable for securities lending, their omission from Forms 10-K and 10-Q distorts widely used metrics such as public float and short-interest ratios. Evidence from issuers of varying size demonstrates that NCO ownership materially affects market transparency, especially when it comprises a significant fraction of outstanding shares. Standardized disclosure would improve the interpretability of market-liquidity data and strengthen investor protection. Practical implications Mandated disclosure would enable investors, analysts and regulators to more accurately assess liquidity risk, float constraints and short-selling conditions. Originality/value To the best of the authors’ knowledge, this paper is the first to evaluate the regulatory implications of NCO share disclosure and to provide a concrete, administratively feasible framework for integrating NCO reporting into existing SEC rules.

Having studies the U.S. legislation on capital markets and commodity markets, the author discovered that it allows the delegation of certain regulatory powers to, mainly, stock exchanges, in particular, those related to licensing professional participants in these markets by conducting qualification exams, establishing and monitoring compliance with market rules with the application of liability measures to violators (exclusion, suspension of membership, restrictions on activities, functions and operations, fines, additional prior control (censorship), suspension or prohibition of associations, etc.). It was established that decisions imposing the liability measures can be appealed to the relevant state regulatory authority, which may support this decision, amend it or set it aside, including remanding the case to self-regulatory organization for reconsideration. In addition, the comparative analysis showed that in the United States, market rules are set forth and reviewed by a self-regulatory organization in line with a procedure that includes, among other things, the US Securities and Exchange Commission conducting public consultations on the relevant rules, taking into account the opinions and comments of the public when approving or disapproving market rules or changes to them. Furthermore, the article indicates that the competent regulatory authority, if it is necessary in the public interest, to protect investors or otherwise to achieve objectives of the legislation, may suspend for a period of up to 12 months or cancel the registration of a self-regulatory organization, or subject its activities to prior control (censure) or introduce restrictions on its activities, functions and operations, if the relevant regulatory authority, following a hearing with the participation of the self-regulatory organization, establishes that such organization has violated or cannot comply with any provision of the law or its own rules, or has failed without sufficient grounds or good reason to ensure compliance with these requirements by its members (participants).

ABSTRACT The increasing volume of accounting research presents challenges in efficiently navigating and synthesizing information. We introduce AIRA—an artificial intelligence (AI)-based application developed to assist scholars in consolidating accounting research papers using generative AI models. Traditional literature review methods are time-consuming. AIRA streamlines this process with natural language prompting. To ensure the application’s reliability and usefulness, we use the design science methodology to validate it meets the designed objectives. Overall, faculty found AIRA achieves its objectives of being useful and easy to use, and they plan to continue using it in the future. A large sample of employees from the Securities and Exchange Commission (SEC) also believed the tool would be useful for their work. In examining the first 500 prompts that were entered by anonymous users, we find that it is used for literature search and retrieval, summarization of research findings, and literature review creation, among other tasks.

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. This paper was accepted by Suraj Srinivasan, accounting. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.02065 .

This study investigates the effect of literacy in traditional financial practices on the adoption of asset tokenization in Rivers State, Nigeria. Adopting a quantitative cross-sectional survey design, primary data were collected from a stratified proportional sample of 255 respondents and from the Accounting, Banking and Finance, Management, and Economics departments across three tertiary institutions: University of Port Harcourt, Rivers State University, and Ignatius Ajuru University of Education. Using SPSS v25, descriptive statistics, normality tests (Shapiro–Wilk, skewness, kurtosis), Pearson correlation, and multiple linear regression were applied to examine how literacy in traditional financial practices (LTFP), involvement in traditional financial practices (ITFP), and financial regulatory clarity and support (FRCS) influence both the level of adoption (LAAT) and intention to adopt asset tokenization (IAAT). The results indicate that LTFP (β = .248, p < .001), ITFP (β = .202, p < .01), and FRCS (β = .226, p < .001) significantly and positively predict LAAT, while LTFP (β = .239, p < .001), ITFP (β = .210, p < .01), and FRCS (β = .234, p < .001) also significantly predict IAAT. The findings confirm that understanding and engagement in traditional finance, coupled with regulatory clarity, are vital enablers of tokenization adoption. The study concludes that enhancing financial literacy rooted in traditional systems, improving regulatory transparency, and aligning community-based finance with digital innovations will accelerate Nigeria’s transition toward asset tokenization. It recommends joint interventions by the Central Bank of Nigeria, Securities and Exchange Commission, National Orientation Agency, and tertiary institutions to expand financial education, regulatory guidance, and awareness of tokenized asset frameworks.

Purpose Public companies with required reporting deadlines subject auditors to a compressed timeframe in which to obtain sufficient evidence to form their opinion on the financial statements. Psychology theory posits that individuals adjust their actions to avoid the penalties associated with missing deadlines. The purpose of this study is to examine the association between deadline-imposed time pressure and audit quality. Design/methodology/approach The authors measure deadline-imposed time pressure as the proximity of the auditor’s report date to the required filing deadline. The authors use different measures of audit quality – restatements and receipt of a Generally Accepted Accounting Principles or disclosure-related Securities and Exchange Commission comment letter related to a company’s Form 10-K. Findings The authors find consistent evidence of lower audit quality when the audit report date is near, at or slightly beyond the original (or extended) required filing deadline relative to companies with an audit report date preceding the required filing deadline by more than a week. In addition, although Big N auditors are able to moderate the negative effects of deadline-imposed time pressure when the audit report date is near the filing deadline (or beyond the extended deadline), these negative effects persist when completing procedures on the required filing deadline or during the extension period. Research limitations/implications The findings suggest that auditors completing procedures at or near the required filing deadline (or extended deadline) may compromise audit quality in an effort to help the client meet the reporting requirement. Originality/value The findings also highlight an opportunity for standard setters to require audit report dating information that could aid financial statement users in identifying auditors under heightened deadline-imposed time pressure.

ABSTRACT We investigate investor behavior and firm performance related to corporate restructuring announcements using a database of Securities and Exchange Commission (SEC) filings by US firms and web traffic on the SEC's website. We find that abnormal investor attention positively predicts restructuring announcements for up to 3 months prior to the announcement and attention stays elevated for at least 12 months afterward. This is true for the attention of both retail investors and mutual funds. We also find that abnormal attention from both retail investors and mutual funds prior to a restructuring announcement is positively related to long‐run abnormal returns to the firm, suggesting that some retail investors exhibit a high degree of sophistication and are not simply noise traders. Our results are consistent with investors focusing their limited attention on restructuring plans with the highest probability of restructuring success.

The digital transformation of public services, particularly in business registration, is a cornerstone of modern e-governance aimed at enhancing efficiency, transparency, and accessibility. This study evaluates the effectiveness of the Securities and Exchange Commission's (SEC) online digital platforms in streamlining registration processes for users in the Bondoc Peninsula, Philippines. Utilizing a descriptive-quantitative research design, data were gathered from 75 respondents, comprising business owners and SEC personnel, to assess user demographics, platform effectiveness across key dimensions, and the challenges encountered. Findings indicate that the SEC's online platforms are generally perceived as effective, offering significant advantages over traditional methods, including time savings, reduced costs, and greater user convenience and empowerment. However, the study also identifies critical barriers to optimal performance, including frequent technical issues (system downtime, interface usability), limited internet connectivity, low digital literacy among some users, and inconsistencies between online and offline support systems. Furthermore, user satisfaction was found to be significantly correlated with age, educational attainment, frequency of platform use, and level of digital literacy. The study concludes that while the SEC's digital initiative marks a positive step toward streamlined governance, its full potential remains unrealized in underserved regions such as the Bondoc Peninsula due to infrastructure and human-centric challenges. It is recommended that the SEC and policymakers focus on enhancing system reliability, launching targeted digital literacy programs, improving user support services, and ensuring better synchronization between digital and traditional operations to foster a more inclusive and efficient business registration ecosystem.

Rule 14a-8 under the Securities Exchange Act of 1934 allows stockholders to submit proposals for inclusion in a company’s proxy materials. The rule assumes that Delaware law provides stockholders with the right to submit non-binding proposals for stockholder approval. But as many have observed, this assumption lacks a firm basis in state law, particularly in Delaware. If such a right exists, a stockholder conducting its own proxy solicitation could submit numerous precatory proposals, including those advancing narrow or special interests. This article concludes that, under Delaware law, stockholders do not have an inherent right to submit precatory proposals. Accordingly, a corporation may adopt bylaws to provide for, and regulate, the submission of such proposals. Although others have advocated for regulating precatory proposals through private ordering, they have generally done so on the assumption that stockholders possess a baseline right to submit them. That assumption creates uncertainty: if such a right exists, it is unclear how far a bylaw may go in restricting or conditioning its exercise. This article examines the potential sources of an inherent precatory proposal right—specifically, the Delaware General Corporation Law and case law on fundamental and subsidiary stockholder rights—and concludes that Delaware law does not provide such a right. That conclusion supports broad flexibility to adopt bylaws governing precatory proposals. Such a bylaw would be meaningful to Delaware corporations, regardless of whether it applies only to stockholders soliciting their own proxies or also to Rule 14a-8 proponents, to the extent the Securities and Exchange Commission permits augmenting Rule 14a-8 by bylaw.

As invested capital underpins financial markets and empowers promising firms to grow quickly, the protection of investors and their capital has long been an essential part of stable financial mar- kets. This protection is part of the primary mission of investment protection agencies such as the Securities Exchange Commission and Financial Industry Regulatory Authority within the United States, and foreign organizations such as the European Securities and Markets Authority and Financial Conduct Authority. A myriad of laws, regulations, and court precedents stemming from these agencies require firms to issue accurate, but not always comprehensive, public statements concerning their products and the health of their operations. At the same time, corporate success is also often linked to confidential information, such as the exact makeup of a product, service, or financial instrument. Since this proprietary information gives firms a competitive advantage, it is within the firm’s interest to maintain confidentiality. The right of investors to know the details of their investments and the opposing right of firms to maintain a competitive advantage often results in a gray area around what information should be released and in how much detail. The discrepancy tempts firms to publish misstatements that have the potential to seriously injure investors’ financial positions. Similarly, since firms are not required to disclose all their operations to investors, it is easy for firms without strong guardrails to mask conflicts of interest that potentially endanger investors. For these reasons, it is imperative that both robust and precise legal guidelines be implemented to prevent divided loyalties, thus requiring firms to provide investors with relevant information while maintaining their competitive advantage.

The intensifying geopolitical frictions between the United States and China, exemplified by the recent implementation of the ‘Chip Tax’ and advanced semiconductor export controls, are fundamentally transforming the global artificial intelligence computing power landscape. This paper examines the dual impacts of these measures through an analysis of their influence on NVIDIA’s profit structure and the simultaneous acceleration of China’s domestic substitution strategy. By adopting a mixed-methods approach that integrates quantitative financial analysis of NVIDIA’s filings with the U.S. Securities and Exchange Commission (SEC) and qualitative policy evaluation, this research reveals that U.S. restrictions have imposed substantial yet temporary financial burdens on NVIDIA. These include an inventory charge of $4.5 billion and a compression of the gross margin by 1,250 basis points in the first quarter of the fiscal year 2026. Concurrently, these policies have served as catalysts, expediting China’s development of a parallel semiconductor ecosystem. This is manifested by Cambricon’s 4,300% surge in revenue and Huawei’s Ascend 910B achieving performance close to that of H2O at 70% of the cost. The study concludes that while the ‘Chip Tax’ effectively exerts short-term pressure on established players, it inadvertently contributes to the formation of a bifurcated global technology landscape, resulting in a fragmented ‘one world, two systems’ scenario that may ultimately enhance China’s determination for technological self-sufficiency.

The listed firm is directed to abide by the standards set forth by the Bangladesh Securities and Exchange Commission in 2018 to guarantee appropriate corporate governance. This research investigates the correlation between Bank Characteristics in Bangladesh and Corporate Governance Disclosure. Six hypotheses are tested, focusing on dependent variables like Corporate Governance Disclosure (major components of corporate governance activities) and six independent variables (Bank Characteristics). The annual report from July 2020 to July 2021 for 32 banks enlisted under the Chittagong Stock Exchange (CSE) was used to conduct this study. The author processes the data with the help of Excel and SPSS and analyzes it through correlation and regression analysis. After conducting a comprehensive study and interpreting the statistical results to test the pertinent hypotheses, it has been concluded that only three variables (bank characteristics), i.e., age of listing with CSE, affiliation with a multinational bank, and bank board size, have a favorable effect on Corporate Governance disclosure. Other variables, such as bank net profit, bank size, and percentage of independent directors, have a significant positive impact on Corporate Governance disclosure according to correlation and regression analysis, respectively. This study generates value for the institutions involved, as well as for other relevant stakeholders. This study may impact the decisions made by creditors and investors. FENI UNIVERSITY JOURNAL, 2024, 3(1), ISSN [2518-3869], PP. (113-130)

Regulatory independence is a foundational element of effective financial market governance, particularly in jurisdictions experiencing rapid market expansion and increasing integration with global capital flows. This article undertakes a comparative analysis of the institutional independence of the Securities and Exchange Board of India (SEBI) with that of the U.S. Securities and Exchange Commission (SEC) and the U.K. Financial Conduct Authority (FCA). It examines the constitutional and administrative dimensions of regulatory autonomy, focusing on appointment processes, enforcement powers, judicial oversight, accountability mechanisms, and susceptibility to executive influence. The study situates SEBI’s regulatory framework within India’s constitutional structure, assessing whether its extensive delegated powers are balanced by adequate safeguards against arbitrariness and regulatory capture. By drawing on comparative regulatory practices, the article identifies structural limitations in India’s current model and advances context-sensitive reform proposals aimed at strengthening SEBI’s independence without undermining democratic accountability. The analysis contributes to contemporary legal scholarship by demonstrating how regulatory independence, when constitutionally grounded and institutionally reinforced, enhances investor protection, market integrity, and regulatory credibility in emerging market economies.

In view of scholars-established link between firm size and share price and the suggested dual causality nexus between firm size and financial performance, the study examined the moderating effect of firm size on the relationship between financial metrics and share prices of listed agriculture and consumer goods firms in Nigeria. It controlled for the pervasive macroeconomic variables of inflation, interest rate and exchange rate. Using purposive sampling technique, a sample of 20 out of the 26 firms of study was obtained. Secondary data were sourced from annual published financial statements of the firms, while the macroeconomic data were obtained from the National Bureau of Statistics and the Central Bank of Nigeria. Generalized least squares regression analysis was performed with the aid of STATA 17. The outcome indicated that return on equity, earnings per share, and firm size, each has a significant positive effect on share prices of listed agriculture and consumer goods firms in Nigeria while current ratio, debt-equity ratio, and total assets turnover each has a non-significant effect on the share prices. Furthermore, firm size has a significant moderating effect on the relationship between financial metrics (proxied by current ratio, and earnings per share) and share prices of listed agriculture and consumer goods firms in Nigeria. In the same vein, firm size has a non-significant moderating effect on the relationship between financial metrics (proxied by current ratio, debt-equity ratio, and total assets turnover) and share prices of listed agriculture and consumer goods firms in Nigeria. Therefore, it was recommended that Security and Exchange Commission should prioritize the appropriate disclosure of the identified key metrics in the financial statements. Furthermore, investors should consider the moderating effect of firm size on the financial metrics to better understand how different metrics impact share prices for firms of varying sizes and adjust their investment strategy accordingly.