Abstract

http://ssrn.com/abstract=2162240
 


 



Does Business Strategy Impact a Firm's Information Environment?


Kathleen A. Bentley-Goode


The University of New South Wales (UNSW) - School of Accounting

Thomas C. Omer


University of Nebraska at Lincoln - School of Accountancy

Brady J. Twedt


Indiana University - Kelley School of Business - Department of Accounting

August 30, 2015


Abstract:     
This study examines whether a firm’s business strategy affects their information environment. Organizational theory suggests that firms following an innovative “prospector” strategy are more likely to have attributes typically associated with information asymmetry (R&D; growth options) than firms following an efficient “defender” strategy. However, prospectors are also hypothesized to have greater external and internal disclosure mechanisms in place to reduce information asymmetry than defenders, thus reflecting the complex relationships that a firm’s strategy may have on their overall information environment. We find that prospectors are associated with greater levels of analyst and business press coverage, and issue voluntary disclosures more frequently, compared to defenders. We also find that prospectors are associated with lower information asymmetry than defenders. Our results suggest that business strategy does affect firms’ information environments, incremental to known determinants, and that strategy likely serves as a useful context for understanding a firm’s underlying information environment.

Number of Pages in PDF File: 47

Keywords: business strategy, information asymmetry, information environment, voluntary disclosure

JEL Classification: D21, D80, L21, M41


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Date posted: October 16, 2012 ; Last revised: September 3, 2015

Suggested Citation

Bentley-Goode, Kathleen A. and Omer, Thomas C. and Twedt, Brady J., Does Business Strategy Impact a Firm's Information Environment? (August 30, 2015). Available at SSRN: http://ssrn.com/abstract=2162240 or http://dx.doi.org/10.2139/ssrn.2162240

Contact Information

Kathleen Ann Bentley Goode
The University of New South Wales (UNSW) - School of Accounting ( email )
Sydney, NSW 2052
Australia
+61 2 9385 6930 (Phone)
+61 2 9385 5925 (Fax)
Thomas C. Omer (Contact Author)
University of Nebraska at Lincoln - School of Accountancy ( email )
307 College of Business Administration
Lincoln, NE 68588-0488
United States
Brady J. Twedt
Indiana University - Kelley School of Business - Department of Accounting ( email )
1309 E. 10th Street
Bloomington, IN 47405
United States

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