PhD Thesis Defense Presentation: Tomas Milo
Tomas Milo, a doctoral student at McGill University in the Accounting area will be presenting his thesis defense entitled:
Two Essays on SEC Reporting Rules
Thursday, May 21, 2026, at 11:00 AM
(The defense will be conducted online)
Student Committee Co-chairs: Prof. Hongping Tan and Prof. Dongyoung Lee
Please note that the Thesis defence will be conducted online. Only the student and their committee members may participate in the presentation.
Abstract
This thesis comprises two essays that examine the consequences of two Securities and Exchange Commission (SEC) reporting rules. In the first study, I investigate the impact of the SEC’s 2017 mandate requiring Foreign Private Issuers (FPIs) using International Financial Reporting Standards (IFRS) to file annual reports in eXtensible Business Reporting Language (XBRL) format. XBRL is a structured, machine-readable format for financial reporting. Leveraging this regulatory setting, I find that FPIs subject to mandatory XBRL filings experience an increase in individual ownership. My main finding is driven by individual investors in FPIs’ home countries rather than those in the United States. I provide two mechanisms for this phenomenon. First, consistent with an investor attention channel, the increase is stronger for firms without American Depositary Receipts (ADR), firms with higher local investor attention, and smaller firms. Second, consistent with an investor ability mechanism, the increase is stronger for firms from countries with pre-existing XBRL mandates and for firms headquartered in countries with higher financial literacy. Overall results suggest that the SEC’s 2017 XBRL mandate primarily facilitates participation by local individual investors in FPIs’ home markets, which is a rather unintended consequence of the mandate from the SEC in the United States.
In the second study, I examine how firms responded to the SEC’s 2020 amendment of Regulation S-K Item 103. Item 103 of Regulation S-K prescribes how firms must disclose legal proceedings. The SEC amended the disclosure to address firms’ low disclosure rate of environmental legal proceedings. The SEC argued that by lowering compliance costs, the amendment would increase the disclosure rate of environmental legal proceedings. To achieve its goals, the SEC increases the minimum threshold for environmental legal proceedings and replaces a sole bright-line disclosure threshold with a hybrid regime that permits firms to use a higher, firm-specific threshold. I document three main findings. First, using textual analysis methods, I find that firms increase their disclosure of environmental legal proceedings after the regulation change. Unique to this setting, I then isolate the effect cross-sectionally using penalty amounts. Cases with penalties between $300,000 and $1 million are more likely to be disclosed after the SEC mandate. Cases with penalties between $100,000 and $300,000 are less likely to be disclosed, as these amounts fall below the amended threshold. I also find that firms disclose environmental legal proceedings earlier following the mandate. I also test for this effect cross-sectionally among penalty amounts and find that cases between $300,000 and $1 million are more likely to be disclosed earlier. Second, firms respond heterogeneously to this new threshold-disclosure regime. Some firms react to the new hybrid approach by disclosing higher firm-specific thresholds, while others use the new rule as a voluntary disclosure channel to disclose that they are retaining the minimum threshold rather than increasing it. Consistent with a high fixed-cost model of disclosure, threshold disclosures are bimodal, with firms disclosing either the minimum or maximum thresholds. Firms with current environmental violations are more likely to increase the threshold, whereas firms with higher proprietary costs are less likely to do so. Third, I leverage the methodology of Christensen et al. (2017) to examine the real effects of disclosing environmental violations in financial filings following the mandate. Comparing firms that disclose environmental violations against firms that do not, I document that disclosing environmental legal proceedings in financial reports after the mandate decreases future environmental violations. I also find that the intensity of disclosure matters, as firms that have a higher intensity of disclosure of environmental legal proceedings experience a larger decrease in future violations. Overall, my findings suggest that the SEC’s 2020 amendment of Regulation S-K Item 103 successfully increases the disclosure of environmental legal proceedings and has real effects on firms’ environmental performance.
