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In a recent speech (see http://www.sec.gov/news/speech/2013/spch041913laa.htm), SEC Commissioner Aguilar addressed the "scale back" of disclosures in connection with the JOBS Act, and the role of institutional investors in the capital markets. Commissioner Aguilar cited a paper noting that institutional investors were better at avoiding the worst-performing investors—presumably based on their analysis of financial information made available by public companies. He noted that the JOBS Act reduces the amount of information required to be made public by emerging growth companies. This raises a number of interesting questions. The accommodations available to EGCs under Title I of the JOBS Act relate principally to scaled back executive compensation disclosures. Would more fulsome executive compensation disclosures be helpful or informative to investment decisions? It is unlikely that more robust compensation disclosures would be essential to an investment analysis. Title I also permits EGCs to present two years of financial information in their filings. Perhaps it could be argued that two rather than three years of data would make a difference to an initial investment analysis; however, there is no data yet that would substantiate whether there is a measurable difference to institutional investor decisions based on the availability of a third year of data. Before concluding that the relatively modest scaled disclosures available to EGCs pose an issue, should we consider whether institutional investors simply have resources to conduct their own analysis, and have access to information (often from investment banks) that is not available to retail investors?
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