Firms justify resource allocation changes in letters to shareholders to garner stakeholder support for new strategies, yet they may simultaneously wish to hide these changes from competitors. We know little about how firms manage this tension, and the literature provides contradictory advice based on a variety of possible stakeholder motivations. We theorize that firms will not fully disclose new strategies unless they expect stakeholder support. Specifically, we hypothesize that camouflage occurs when a firm deviates significantly from the typical resource allocation patterns of its industry, especially in resource-constrained environments and in response to declining performance. Using a deep learning machine model to assess changes in firms’ public language, we find support for our hypotheses in a sample of Standard & Poor 500 companies.
