Does Reducing Disclosure Mean Fewer Pre-IPO Lawsuits?

Can silence solve problems that words cannot?  The Securities and Exchange Commission (SEC) hopes so, because this premise underlies the confidential filing provision of the Jumpstart Our Businesses (JOBS) Act.  But how firms benefit from confidential filings remains unclear, complicating efforts to assess the efficacy of this provision.  In our study, we highlight a potentially unintended benefit of the confidential filing provision by showing that filing confidentially helps shield firms from non-shareholder litigation risk in advance of IPOs.

Countless anecdotes describe the IPO period as a uniquely challenging time in the life of a private company.  Much of these challenges … Read more