ABSTRACT I examine whether and to what extent firms credibly disclose proprietary private information ahead of seasoned equity offerings. I assess proprietary information disclosures based on the magnitude of the association between a private information-based proxy and stock returns. Using a difference-in-differences design around the Securities Offering Reform (SOR) of 2005, which relaxed restrictions on disclosures, I find that equity-issuing firms disclose more than twice as much proprietary information post-SOR relative to pre-SOR and relative to the same change for the control firms. I corroborate my findings using major customer identity disclosure and limiting the sample to firms with multiple equity offerings. Results are robust after controlling for information flow from insider trading, institutional investors, and financial analysts. Finally, I document that disclosure of proprietary information leads to a 10–23 percent drop in underpricing. These findings offer new insights into how firms balance the proprietary costs and benefits of disclosure. JEL Classifications: M41; K22; G14.

Abstract We examine the costs of trading restrictions by exploiting an SEC rule change eliminating an approximately 80-day restriction period in private placements for small issuers. Using a difference-in-differences specification, we find that the restriction is binding, as dollar volume increases 19 percentage points vis-à-vis proceeds, and costly, as offering discounts fall by 8 percentage points. Discounts fall more for issuers with higher information asymmetry or longer restriction periods. We account for endogenous responses to the rule change. Overall, our findings suggest that trading restrictions are costly and have large effects on firms’ cost of capital.