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Corporate strategy and information disclosure

By Daniel Ferreira and Marcelo Rezende

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

Topics: HB Economic Theory, HD28 Management. Industrial Management, HG Finance
Publisher: Wiley-Blackwell
Year: 2007
DOI identifier: 10.1111/j.1756-2171.2007.tb00050.x
OAI identifier: oai:eprints.lse.ac.uk:39402
Provided by: LSE Research Online
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