Talk less and do more: Expected strategic adjustments vs. actual changes in the Chinese firms

Abstract

Using a sample of listed firms from 2011 to 2019 in Chinese A-share markets, this paper examine the consistency of strategic information disclosure and strategic behavior change, and it's impact on firm's future growth and the cost of capital. Using the expected strategic adjustment as a proxy of strategic information disclosure, we find that expected strategic adjustment is positively associated with actual strategic changes, and such positive association is strengthened for the firms with state-owned nature, more redundant resources, defensive strategy, lower economic policy uncertainty and higher value. Furthermore, we find that the consistency of talks and actions is associated with a higher firm growth. If talk more and do less, firms will face a higher cost of capital. In brief, this paper provides an indicator of strategic information disclosure to predict corporate strategic behavior for Chinese listed firms. More importantly, we suggest that the management of firm's talk-do relation is meaningful to firm growth, and the market will negatively respond to the deviation of “talk more but do less”.