Financial Reporting Around Private Firms’ Equity Offerings

This paper investigates how U.S. private firms communicate with equity investors around private capital raising. Using multiple research methods, including survey, interview, and archival analysis, I provide systematic evidence on private firms’ public and private disclosure practices. I find that despite engaging in a low level of public disclosures, private firms actively communicate with investors through the private communication channel at initial fundraising and subsequent periods. Indirect evidence also suggests that private firm managers take into account the usefulness of the information when making disclosure choices. Lastly, I investigate the relation between firms’ private communication and public reporting preference and find a substitutive effect. The study informs current debate on regulating private market participants by examining existing disclosure landscape of private firms as an important first step