Events

Despite strong incentives to increase visibility and disclosure before initial public offerings (IPOs), many firms take advantage of the confidential filing provisions of the JOBS Act of 2012 to obscure their financial and non-financial information prior to IPOs. We posit that one potential reason for reducing disclosure prior to an IPO is to reduce risk of opportunistic litigation. Relative to a matched sample of firms that file their registration publicly, firms that file confidentially under the provisions of the JOBS Act experience 25% fewer lawsuits during their pre-IPO period. Our findings suggest that filing confidentially shields IPO firms from lawsuits from other businesses and lawsuits that likely lack legal merit.