The Securities and Exchange Commission (SEC) allows firms to redact information from material contracts by submitting confidential treatment requests, if redacted information is not material and would cause competitive harm upon public disclosure. This study examines whether managers use confidential treatment requests to conceal bad news. We show that confidential treatment requests are positively associated with residual short interest, a proxy for managers’ private negative information. This positive association is more pronounced for firms with lower litigation risk, higher executive equity incentives, and lower external monitoring. Confidential treatment requests filed by firms with higher residual short interests are associated with higher stock price crash risk and poorer future performance. Collectively, our results suggest that managers redact information from material contracts to conceal bad news.

中文翻译：

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公司是否会编辑重要合同中的信息以隐瞒坏消息？

证券交易委员会 (SEC) 允许公司通过提交保密处理请求来编辑重要合同中的信息，如果编辑的信息不重要并且会在公开披露时造成竞争损害。本研究考察了管理者是否使用保密的治疗请求来隐瞒坏消息。我们表明，机密处理请求与剩余空头兴趣呈正相关，后者是经理私人负面信息的代表。对于诉讼风险较低、高管股权激励较高和外部监控较低的公司而言，这种正相关更为明显。剩余空头权益较高的公司提出的保密处理请求与较高的股价崩盘风险和较差的未来业绩相关。集体，