Foreshadowing as Impression Management: Illuminating the Path for Security Analysts

John R. Busenbark, Donald Lange, Samuel Certo

Research output: Contribution to journalArticlepeer-review

76 Scopus citations


Research summary: Managers can disclose information to security analysts as a form of impression management, but doing so is problematic because competitors can use that same information at the expense of the firm. We identify an impression management technique we call foreshadowing, which refers to hinting about future potential strategic activity. Foreshadowing provides information of value to analysts that can influence their evaluations of a firm, but not so much information as to put the firm at a competitive disadvantage. We hypothesize and find that managers who foreshadow acquisition announcements receive fewer analyst downgrades following the announcements, especially when there is more analyst uncertainty about the firm. We also hypothesize and find that analysts' responses to foreshadowing positively influence the likelihood that managers eventually acquire other firms. Managerial summary: Security analysts are often suspicious when firms announce acquisitions as those announcements are cumbersome to analyze on short notice and raise questions about managerial motivations that might not represent the best interests of the firm. We find that managers can improve analyst reactions to acquisition announcements by disclosing some information of value to analysts—specifically by hinting that an acquisition could occur in the future. We refer to such hints as foreshadowing. Foreshadowing entails giving analysts information to reduce their suspicions and facilitate their analyses, but not so much information as to degrade the firm's competitive information advantage over other firms. Foreshadowing also allows managers the option to reconsider actually executing the acquisition if analysts respond negatively to its possibility.

Original languageEnglish (US)
Pages (from-to)2486-2507
Number of pages22
JournalStrategic Management Journal
Issue number12
StatePublished - Dec 2017


  • acquisitions
  • impression management
  • security analysts
  • uncertainty
  • voluntary disclosure

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management


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