Date of Award


Embargo Period


Degree Type


Degree Name

Doctor of Philosophy (PhD)


Tepper School of Business


Carlos Corona


This thesis examines the interactions between a firm’s information disclosure decision and three markets: the product market, the takeover market, and the labor market, and the impact on firms’ real decisions. Chapter 1 provides an introduction and overview of this thesis. Chapter 2 considers a product-market competition setting through which to examine firms’ investments in explorative initiatives and their choices of capitalization method regarding exploration related expenditures. The capitalization of exploration expenditures may contain information on whether a firm’s exploration investment is successful, which may then incur imitative behavior from competitors (the information spillover effect), or intimidate competitors from investing (the pre-empting effect). These two effects are driving forces that induce firms to choose different capitalization methods. I find that if regulators require firms to capitalize only expenditures of successful explorations, firms may increase innovation. This study sheds light on the real effect that recognition of exploratory success has on firms’ exploration investments. Chapter 3 considers a setup in which the takeover market plays a disciplinary role in replacing an inefficient incumbent manager to increase firm value. We show that increasing the information quality improves takeover efficiency, but more precise information induces frequent managerial turnover and discourages the manager from working hard. We find that a perfectly informative accounting system is never optimal. Moreover, current shareholders prefer even higher information quality in the presence of antitakeover laws or provisions, since in such cases, motivating a raider to bid is particularly important for current shareholders. Chapter 4 examines shareholder decisions on innovative investments and information quality in the presence of managerial career concerns. Managers’ reputation concerns are costly to shareholders because managers must be compensated for taking career risks. I show that shareholders face a tradeoff when determining the information quality: lowering the information quality can mitigate a manager’s career risk; however, it also hinders motivating managerial effort. I find that for higher managerial career concerns, shareholders with intense innovation urgency invest more in innovation and lower the information quality to protect the manager from exposure. In contrast, shareholders with lower levels of innovation urgency invest less to mitigate managerial career risk while increasing the compensation incentive to motivate higher managerial effort. My results shed light on the effects of career concerns on innovative investment, disclosure policy, and compensation incentives.