Voluntary Public Disclosure of Revenues by Private Companies in the United States

We investigate the relationship between capital raising under Regulation D and the decision to voluntarily disclose revenues to the public. We find that the nondisclosers raise more capital than the disclosers. We hypothesize that this is an equilibrium outcome, where high-revenue companies choose nondisclosure and low-revenue companies disclose to deter competition. In support of this hypothesis, when we look to the future, we find that the nondisclosers continue to be more successful than the disclosers in terms of the capital they raise in their next Form D filings. Furthermore, their future performance resembles that of high-revenue disclosers more than low-revenue disclosers. We further find that cities and industries with more disclosure in one year see fewer capital raisings via Form D in the next year, consistent with disclosure of low revenues deterring competition. Collectively, our evidence fails to support the notion that nondisclosure is systematically used by low-revenue companies to fool investors.