Is There Information in Corporate Acquisition Plans?

Sinan Gokkaya, Xi Liu and René M. Stulz

No 32201, NBER Working Papers from National Bureau of Economic Research, Inc

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: 2024-03
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