Beyond the Transaction: The Value Relevance of Business Information in Form 10 Registration Statements

Abstract

We examine whether registration statements convey value-relevant business information, beyond the transaction-related disclosures examined in prior research. Corporate spinoffs provide a unique setting to isolate this type of information: unlike IPOs, they do not raise capital, involve minimal underwriter activity, and allow for continuous trading of the parent stock when the registration statement (Form 10) is filed. We document a robust and economically meaningful market response to Form 10 filings, both in terms of returns and trading volume. These responses are not positively associated with transaction-related disclosures or linguistic features previously shown to influence market outcomes in related settings, suggesting that investors are responding to business content. Moreover, we find that unique, firm-specific disclosures-particularly narrative disclosures about financial information-are most strongly associated with these responses. Finally, these information effects spill over to future industry peers of the entity being spun off, indicating that the disclosed information is broadly informative. Our findings suggest registration statements serve as a meaningful source of business information, even when the underlying entity was previously part of a public firm. These results have implications for disclosure regulation, the informativeness of segment reporting, and the identification of value-relevant content in financial filings.

Keywords: registration statements, Form 10, spinoffs, business disclosures, investor response