SEC’s disclosure effectiveness initiative reshapes MD&A disclosure requirements
Journal of Investment Compliance
ISSN: 1528-5812
Article publication date: 27 September 2021
Issue publication date: 28 October 2021
Abstract
Purpose
This article examines rule amendments issued by the US Securities and Exchange Commission in November 2020, as part of the SEC’s ongoing “disclosure effectiveness initiative”, that revise in significant respects the requirements for financial disclosures presented in SEC filings as Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Design/methodology/approach
This article provides an in-depth analysis of the rule amendments in the context of contrasting perspectives expressed by the SEC, individual SEC Commissioners who dissented from adoption of the amendments, and market participants regarding the merits of the SEC’s movement away from prescriptive disclosure requirements towards a more principles-based approach to disclosure.
Findings
Although the SEC’s rules have long reflected a mix of principles-based and prescriptive disclosure elements, the principles-based emphasis in this latest stage of the SEC’s disclosure modernization project accords the managements of filing companies greater latitude to determine whether financial information is material to investors and how such information should be presented.
Originality/value
This article provides expert guidance on a major new SEC disclosure development from an experienced securities lawyer.
Keywords
Citation
Parrino, R.J. (2021), "SEC’s disclosure effectiveness initiative reshapes MD&A disclosure requirements", Journal of Investment Compliance, Vol. 22 No. 4, pp. 322-333. https://doi.org/10.1108/JOIC-06-2021-0027
Publisher
:Emerald Publishing Limited
Copyright © Hogan Lovells 2021.