Do firms follow the SEC’s confidential treatment protocols? Evidence from credit agreements

Abstract

I examine whether firms follow the Security and Exchange Commission’s confidential treatment protocols when redacting potentially material information from their credit agreements. My findings suggest that most firms withhold potentially material information without submitting a request for confidential treatment to the SEC and without making interested parties aware of their information disadvantage. I also find evidence consistent with lender and borrower incentives driving the decision to withhold potentially material information from the credit agreement. Finally, my findings are consistent with lenders influencing redaction decisions not out of concern about rivals but because they do not want their other borrowers to see the terms.

Keywords: Disclosure, Banks, Redacted Credit Agreements, Redacted Disclosure, SEC Noncompliance

JEL Classification: G32, G21, C78, L14