Out of the Shadows: Requiring Strategic Management Disclosure

198 I. INTRODUCTION 198 II. STRATEGIC MANAGEMENT OVERVIEW 203 A. Strategic Management Process 204 1. Formulation Stage 204 2. Implementation Stage 205 3. Evaluation and Revision Stage 206 B. Benefits of Strategic Management 207 III. DISCLOSURES OF STRATEGY AND RISK 210 A. Disclosure Mandates Relating to Strategy and Risk 211 1. (Non)-Mandated Disclosure of Strategy 211 2. Mandated Disclosure of Risk 219 a. Management’s Discussion and Analysis 219 b. Market Risk and Market-Sensitive Instruments 222 c. Risk Factors 224 3. Rationale for Disparate Risk and Strategy Disclosures 225 B. Mandated Disclosure as to Management Processes 227 1. (Non)-Mandated Disclosure of Strategic Management Process 227 2. Mandated Disclosure of Risk Management Process 228 a. Enron and Risk Management Requirements 229 b. Financial Crisis and Risk Management Requirements 234 IV. SPURRING STRATEGIC MANAGEMENT THROUGH SECURITIES LAWS ... 237 A. Concerns with Lopsided Disclosure of Risk and Strategic Management 237 * Assistant Professor, Marquette University Law School. I would like to thank Ed Fallone, Kali Murray, Michael O’Hear, and David Orozco for their invaluable input on this article. In addition, I would like to thank participants of the 2012 Midwest Law and Economics Association Annual Meeting for their input. I would also like to thank Jeff Benson, Ryan Kehl, Michael Koutnik, Emily Krambs, Francisco (Paco) Quiroz, and Drew Walgreen for their excellent research assistance in connection with this and related articles. Finally, I would like to thank my family for their love and support throughout the research and writing process. GROSSMAN_to_printer.docx (DO NOT DELETE) 7/20/14 8:39 PM 198 WEST VIRGINIA LAW REVIEW [Vol. 116 B. Disclosing Strategic Management: A Proposal 246 V. CONCLUSION 254