Do companies redact material information from confidential SEC filings

U.S. public companies can redact information from required material contracts disclosures when management asserts that the information is immaterial and would cause competitive harm if publicly disclosed (i.e., it is proprietary). This study examines whether managers use this channel to withhold material information from investors. We find that firms’ stock price discovery process is significantly slower and insider trading is significantly greater after companies file redacted contracts compared with non-redacted contracts. Using data obtained under the Freedom of Information Act, we find that redacted material contracts withhold both quantitative and qualitative information and redacted information is predictably associated with insider trading. These findings suggest that at least some information redacted in material contracts is material to investors.