Concentrating ownership allows firms to limit their information disclosure to the public. Opacity is a good strategy because it prevents leakage of proprietary information to competitors and allows firms to avoid unwanted political or social scrutiny. Firms with proprietary knowledge and specific human capital tend to concentrate their ownership and decision rights in the individuals who possess the specific knowledge (Jensen and Meckling, 1992; Christie, Joye, and Watts, 1993). Assigning control to individuals without specific knowledge can lead to suboptimal decisions or a high cost of transferring knowledge to necessary individuals. Moreover, if firms with proprietary knowledge give more individuals decision rights, they also have to give those.
