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Form 8-K also provides substantial benefits to listed companies. By filing an 8-K in a timely fashion, the firm's management can meet specific disclosure requirements and avoid insider trading allegations. Companies may also use Form 8-K to notify investors of any events that they consider to be important.
Form 8-K reports may be issued based on other events up to the company's discretion that the registrant considers to be of importance to shareholders.
Like any legally required paperwork, Form 8-K imposes costs on businesses. There is the cost of preparing and submitting the forms, as well as possible penalties for failing to file on time. Although it is only one small part of the problem, the need to file Form 8-K also deters small companies from going public in the first place. Requiring companies to provide information helps investors make better choices. However, it can reduce their investment options when the burden on businesses becomes too high.
