Corporate Strategy and Information Disclosure
30 Pages Posted: 28 Nov 2003
Date Written: February 27, 2006
This paper examines voluntary disclosures of information about corporate strategies. We develop a model in which managers choose whether to reveal their strategic plans only to some partners of the firm or also to the outside world. We show that managers face a tradeoff when deciding whether to disclose their private information to outsiders. On the one hand, by disclosing their intentions, managers become reluctant to change their minds in the future. This may lead them to make inefficient project implementation decisions. On the other hand, information disclosure about corporate strategy provides strong incentives for partners of the firm to undertake strategy-specific investments.
Keywords: Corporate Strategy, Disclosure, Commitment, Public Announcements, Managerial Intentions
JEL Classification: M41, M45, J24
Suggested Citation: Suggested Citation