Information Disclosure to Employees and Rational Expectations: A Game‐Theoretical Perspective

Martin Frantz Walker Pascal

Journal of Business Finance & Accounting, 1997, vol. 24, issue 9‐10, 1421-1431

Abstract: This paper analyses the voluntary disclosure strategies of a privately informed firm manager when the information is relevant to both a financial market for valuation purposes and a union for wage bargaining purposes. Disclosure of favourable information may adversely affect the terms under which the firm can secure the required flow of labour and may thus lead to a decrease in the firm's market value. The paper shows that both a full‐disclosure and a nondisclosure equilibrium may exist, which contradicts an earlier analysis of the issue made by Pope and Peel (1981).

Date: 1997
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Journal of Business Finance & Accounting is currently edited by P. F. Pope, A. W. Stark and M. Walker

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