Challenging Neoclassical Models of Financial Communication: A Canadian Case Study

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Abstract

This thesis is focused on three dimensions of voluntary disclosure utilized by public corporations to start challenging existing neoclassical assumptions in the literature around financial disclosure. The first dimension is management's understanding of market and investor complexity to effectively reduce information asymmetries. It was found that management can be at an informational disadvantage in trying to understand the investor. Next, is the role of two-way communication in financial disclosure. Two-way communication is seen by management as the most effective form of communication and is used by management to better understand the investor and their needs. Lastly, are the roles of reputation, trust and relationships in financial disclosure. Management views reputation, trust and relationships as key elements of the firm's disclosure policy with financial market participants. In addition to these three dimensions are illustrations of the role that investor relations undertake in helping to facilitate management's understanding of market and investor complexity, two-way communication and building reputation, trust and relationships. A qualitative based case-study approach was used on a unique Canadian situation to provide access to behind the scenes information that may not be readily accessible to an external researcher. The case study and associated results sets the stage for future empirical studies into updating the neoclassical assumptions to better predict the outcome of future events.

Keyword(s)

Canada; Financial disclosure; Investor relations; reputation; trust; two-way communication

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