Manager sentiment, deal characteristics, and takeover performance

Suwei An, Yi Liu, Xiaofen Tan and Kai Wu

The British Accounting Review, 2024, vol. 56, issue 6

Abstract: Various studies analyze the driving forces behind takeover activities, including investor sentiment, liquidity, and fundamental shocks. In this study, we examine how manager sentiment influences takeover characteristics and long-term performance using textual analysis of data in 10-K and 10-Q filings. Our findings identify that manager sentiment has strong positive predictive power for takeover activities, and high (positive) manager sentiment decreases the long-term performance of takeover deals. Moreover, we show that high-sentiment managers tend to undertake large deals, decrease all-stock transactions, acquire hard-to-value targets, and provide high target valuations, suggesting over-investment for underperforming high-sentiment deals.

Keywords: Manager sentiment; Deal characteristic; Takeover performance; Textual analysis (search for similar items in EconPapers)
JEL-codes: G02 G30 G34 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:56:y:2024:i:6:s0890838924001136

DOI: 10.1016/j.bar.2024.101374

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