Do Firms Strategically Internalize Disclosure Spillovers? Evidence from Cash‐Financed M&As
Name
SSRN-id3158520.pdf
Description
Accepted version
Size
1.27 MB
Format
Adobe PDF
Checksum (MD5)
03b52caf18fabbd02759e5123d6fbb2e
Author(s)
KIM, JINHWAN
VERDI, RODRIGO S
YOST, BENJAMIN P
Date Issued
2020
Journal
Journal of Accounting Research
Publisher
Wiley
Version
Author's final manuscript
Abstract
© University of Chicago on behalf of the Accounting Research Center, 2020 We investigate whether managers internalize the spillover effects of their disclosure on the stock price of related firms and strategically alter their disclosure decisions when doing so is beneficial. Using data on firm-initiated disclosures during all-cash acquisitions, we find evidence consistent with acquirers strategically generating news that they expect will depress the target's stock price. Our results suggest the disclosure strategy leads to lower target returns during the negotiation period when the takeover price is being determined and results in a lower target premium. These findings are robust to a battery of specifications and falsification tests. Our results are consistent with expected spillovers influencing the timing and content of firms’ disclosures in M&A transactions.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1111/1475-679X.12337
