Abstract
This study investigates the confidential IPO registration process that is adopted by 86% of firms since the JOBS Act of 2012. Using textual analysis, I am the first to compare the information content of draft registration statements (DRS) to its formal prospectus (Form S-1) and document that valuable information is produced during the confidential revision process between the firm and SEC. I construct a novel proxy for the content of SEC comment letters before their release, which leads to a 4.5% cumulative abnormal return. I find that changes in the proportion of positive words are strongly associated with operating performance, reflecting the fundamental risk of offerings. Moreover, changes in word content indicate changes in a firm’s risk environment that can further explain offer price revision, underpricing, and the withdrawal decision. Lastly, I show that the confidential revision process substantially improved disclosure quality and IPO completion rate while lengthening the entire registration process by 40 days