Financial Communication and Employee Share Ownership: Analyzing the Dynamics Between Managers and Employee Shareholders

Abstract

This study examines the relationship between between executives and employee shareholders in the context of financial communication. It explores how financial communication impacts the alignment of interests between executives and employee shareholders, using agency and entrenchment theories as frameworks. Two scenarios are analyzed: the alignment of executive and shareholder interests and the control of executive actions. Findings reveal that informational asymmetry often benefits executives, enabling entrenchment and creating imbalances. The study highlights the critical role of financial communication in reducing conflicts, fostering transparency, and aligning stakeholder interests, while calling for further empirical research to deepen understanding of these dynamics.