Corporate Strategy and Information Disclosure

Posted: 7 Mar 2006 Last revised: 15 May 2008

See all articles by Daniel Ferreira

Daniel Ferreira

London School of Economics - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Marcelo Rezende

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Abstract

We examine 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, G31

Suggested Citation

Ferreira, Daniel and Rezende, Marcelo, Corporate Strategy and Information Disclosure. RAND Journal of Economics, Vol. 38, No. 1, pp. 164-184, Spring 2007 . Available at SSRN: https://ssrn.com/abstract=887955 or http://dx.doi.org/10.2139/ssrn.473562

Daniel Ferreira (Contact Author)

London School of Economics - Department of Finance ( email )

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HOME PAGE: http://personal.lse.ac.uk/FERREIRD/

European Corporate Governance Institute (ECGI)

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1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Marcelo Rezende

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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