Affiliation:
1. Department of Accounting, The University of Melbourne, Victoria 3010, Australia;
2. Krannert School of Management, Purdue University, West Lafayette, Indiana 47907
Abstract
This paper examines how a manager uses voluntary disclosure to influence corporate control by a short-term shareholder. Because a short-term shareholder intervenes excessively, the manager’s disclosure strategy is determined by the trade-off between excessive and insufficient intervention. In equilibrium, when shareholder short-termism is not too high, the manager discloses both good and bad news and withholds intermediate news. Alternatively, when shareholder short-termism is high, the manager only discloses good news and withholds bad news. In both equilibria, withholding information is value-enhancing for the nondisclosing firms. We also show that the likelihood of disclosure weakly decreases as the shareholder is more short-term-oriented. Moreover, nondisclosing firms are more likely to face shareholder intervention than disclosing firms. This paper was accepted by Brian Bushee, accounting. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4357 .
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Subject
Management Science and Operations Research,Strategy and Management
Cited by
3 articles.
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