SEC Workload: Matching between Offices and SIC Codes

Number of SICs over Time
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When a firm attempts to go public in the U.S., it is obligated to file a registration statement with the Securities and Exchange Commission (SEC). Almost always, the SEC staff will perform a detailed review of the filings and issue comments on potential deficiencies. Typically, the issuer responds to each comment by changing the passages in question or by explaining why the comment is not applicable.

Potentially, this review process can influence important aspects of going public, such as the amount of material to disclose and disclosure quality. In one of our current research projects, we study this review process. Based on Ege et al. (2020), we define an SEC workload measure that attempts to capture the number of filings in review for each day and – most importantly – for each office of the Division of Corporation Finance (which conducts the reviews). Filings are assigned to these offices based on the Standard Industry Classification (SIC) Code of the corresponding firm. Hence, workload should be computed for each office separately and the matching between SIC Codes and offices becomes an important ingredient. The current matching is available at https://www.sec.gov/info/edgar/siccodes.htm but has changed in the past. This is why historical matchings should be used. Similar to Ege et al. (2020), we reconstruct the matchings via archive.org, for instance, https://web.archive.org/web/20110412030057/https://www.sec.gov/info/edgar/siccodes.htm. This example emphasizes that the current matching is very different from the past ones. We use the date at the bottom of each page to determine the validity date for each matching.

The result as of 16th October 2020 can be downloaded here. Each row corresponds to a SIC Code and each column to a validity date. The following plot presents the number of SIC Codes for Offices 1, 3, 9, and 10 against time and shows that changes in SIC ranges were sometimes quite large. The vertical gray lines indicate the validity dates.

Number of SICs over Time

For instance, on 17th October 2007, the number of SIC Codes assigned to Office 9 increased from 1 to 39. Another example would be the substantial structural change after 1st November 2019 where the number of offices was reduced.

References

Ege, M., Glenn, J. L., & Robinson, J. R. (2020). Unexpected SEC Resource Constraints and Comment Letter Quality. Contemporary Accounting Research, 37(1), 33–67. https://doi.org/10.1111/1911-3846.12505

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