Beyond balance sheet minimum requirements

Corporate disclosure consists of mandatory periodic disclosure and voluntary disclosure. Both contribute to the reduction of information asymmetries arising between the company and the current and/or potential investors, and between the company and other users. The compulsory information is prescribed by current applicable regulations and accounting standards, and refers to periodic financial reports. Further, companies have at their disposal several channels to communicate additional information to the public on a voluntary basis (e.g. conference calls, road shows and press releases). Concerning mandatory disclosure, the balance sheet is one of the fundamental financial statements for all companies, including firms undertaking Initial Public Offerings (IPOs). IPO prospectuses are the first means for firms willing to quote on capital markets to disclose financial information to the public. Several determinants may influence the level of disclosure, measured in terms of disclosed balance sheet items, in IPO prospectuses. Moreover, the extent of disclosure may affect investors’ ability to value the IPO. Based on a sample of 683 IPOs completed between 2003 and 2012, the results suggest that post-crisis firms and companies with a greater time distance between S-1 and 424 filings present a greater level of detailed information concerning their liabilities. In addition, firms operating in the ‘Oil, Gas and Coal’ industry present a greater disclosure level compared to the other industry types. Further analyses indicate that firstday returns are negatively affected by noncurrent assets and positively influenced by noncurrent liabilities.