Study Findings from University of Illinois Provide New Insights into Investment (Do Companies Redact Material Information From Confidential Sec Filings? Evidence From the Fast Act): Investment

2023 SEP 08 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- A new study on Investment is now available. According to news reporting originating from Champaign, Illinois, by NewsRx correspondents, research stated, “The Securities and Exchange Commission permits companies to redact proprietary information from material contract filings, so long as the redacted information (1) would cause competitive harm if disclosed, and (2) the information is legally immaterial. Because these joint criteria are inherently contradictory, we examine whether legally immaterial redacted information is economically material to investors.”

Our news editors obtained a quote from the research from the University of Illinois, “We find that firms’ stock price discovery process is significantly slower and insider trading is significantly greater after companies file redacted contracts compared to nonredacted contracts. We then examine the impact of the 2019 FAST Act, which reduced the SEC’s oversight of redacted contracts. Companies redact more frequently and insider trading (but not speed of stock price discovery) is more pronounced after the FAST Act.”

According to the news editors, the research concluded: “Taken together, these findings suggest that at least some redacted information is economically material to investors and that reducing SEC oversight of redacted information may not be in investors’ best interests.”

This research has been peer-reviewed.

For more information on this research see: Do Companies Redact Material Information From Confidential Sec Filings? Evidence From the Fast Act. The Accounting Review, 2023;98(4):405-433. The Accounting Review can be contacted at: Amer Accounting Assoc, 5717 Bessie Dr, Sarasota, FL 34233, USA.

The news editors report that additional information may be obtained by contacting Anne M. Thompson, University of Illinois, Gies Sch Business, Dept. of Accountancy, Champaign, IL 61820, United States. Additional authors for this research include Oktay Urcan and Hayoung Yoon.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.2308/tar-2020-0703. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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