Open AccessBusiness Strategy and Intra-Industry Information Transfers
Author(s) -
Peng Guo
Publication year - 2017
Publication title -
accounting and finance research
Language(s) - English
Resource type - Journals
eISSN - 1927-5994
pISSN - 1927-5986
DOI - 10.5430/afr.v6n3p1
Subject(s) - business , earnings , affect (linguistics) , typology , industrial organization , microeconomics , economics , finance , linguistics , philosophy , archaeology , history
This study examines whether business strategy affects information transfers from one firm to its industry peers. I use Miles and Snow’s (1978, 2003) organizational typology to classify firms along a continuum with innovative ‘prospector’ firms at one end and stable low-growth ‘defender’ firms at the other. When a firm announces its earnings, the information transfer to other peer firms in the same industry is weaker (stronger) when the announcing firm is a prospector (defender). In addition, information transfers from the announcing firm to industry peers are weaker (stronger) when the industry peer is a prospector (defender). Taken together, the evidence in this paper suggests that firms’ business strategies affect the strength of information transfers.