The Effects of Managers’ Disclosure Strategies on Investors’ Information-Acquisition Behavior and Firm Value

Abstract

Recently, managers have tended to disclose information to increase firm value. However, there are managers who do not disclose information. These managers’ information-disclosure strategies are debated in the product market. In contrast, the situation where managers do not disclose information in the capital market is not debated. In this study, I analytically investigate the information-disclosure strategies for managers who have access to two types of information, from the viewpoint of firm value. Especially, I focus on managers’ investment to maximize firm value. In addition to this I examine managers’ information disclosure strategies considering several sources of information and investors’ information-acquisition behavior. This study presents the situation where the manager chooses voluntary disclosure. It also notes the situation where the manager chooses non-disclosure, because of investors’ information-acquisition behavior. If the manager chooses non-disclosure, investors can gain an advantage over market participants by observing information. So investors have an incentive to acquire information, and the firm value increases.