Is There Information in Corporate Acquisition Plans?

Sinan Gokkaya, Xi Liu and Rene M. Stulz
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Sinan Gokkaya: Ohio U
Xi Liu: Miami U of Ohio
Rene M. Stulz: Ohio State U and ECGI

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: For many firms, the acquisition process begins with the development of an acquisition plan that is communicated to investors. We construct a comprehensive sample of acquisition plans to provide novel perspectives on the acquisition process and find that acquisition plans are informative to investors and incrementally predict subsequent acquisition activity. These results are more pronounced for firms announcing their commitment to acquisitions from an internal pipeline. Acquisition plans improve acquisition performance due to learning from market feedback and alleviate acquisition-related market uncertainty. Communication of acquisition plans does not increase takeover premiums but is less common in more competitive industries.

JEL-codes: G14 G24 G30 G34 (search for similar items in EconPapers)
Date: 2024-02
New Economics Papers: this item is included in nep-cfn and nep-com
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2024-04

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