Antitrust risk and voluntary M&A disclosure

I examine how antitrust risk affects firms' voluntary disclosure of mergers and acquisitions (M&As). I hypothesize that firms face a trade-off between the benefits of disclosing M&As to capital markets—namely, incorporating product market benefits into stock prices in a timely manner—and the potential antitrust scrutiny such disclosure can invite, which increases the likelihood of agencies challenging the M&A. Using two quasi-exogenous sources of variations in antitrust enforcement that affect the level of antitrust risk, I find a negative relation between antitrust risk and voluntary M&A disclosures in deal press releases, periodic SEC filings, and quarterly earnings conference calls. The effects are concentrated among managers with short-term horizons, where the trade-off is most salient. Further analysis suggests that media coverage is one mechanism through which voluntary M&A disclosure poses antitrust risk. Collectively, my findings establish antitrust risk as a significant determinant of firms’ voluntary disclosure.