Information transfer and firm-level strategy

In this article, I examine a previously unexplored avenue for information transfer: similarities in firms' strategies. This examination is based on the idea that information transfer is likely to be positively related to similarity in business activities. Drawing on the concept of generic strategies found in the strategy literature, I develop a measure of strategic distance between firms. Using this measure, I provide evidence that information transfer is positively related to the similarity of firms' strategies. In addition, I find that this information transfer is strongest when the announcing firm is large or has persistent earnings.