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Does continuous disclosure affect the market reaction to mergers and acquisitions announcements?

Author

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  • Shams, Syed
  • Bose, Sudipta
  • Gunasekarage, Abeyratna
  • Velayutham, Eswaran

Abstract

We examine the association between the degree of continuous disclosure by bidders and the market reaction to the announcement of 3512 mergers and acquisitions (M&As) by Australian bidders during the period 2000–2017. Using four proxies for continuous disclosure (total number of disclosures, total number of sensitive disclosures, total number of pages, and total number of sensitive pages), we find a positive association between the market reaction to M&A announcements and the level of continuous disclosure made by bidders. These findings imply that investors, when assessing M&A deals, find bidders' disclosures to be informative and value relevant. Further analyses reveal that this positive association is more pronounced for private target acquisitions, stock-financed acquisitions, and unrelated acquisitions.

Suggested Citation

  • Shams, Syed & Bose, Sudipta & Gunasekarage, Abeyratna & Velayutham, Eswaran, 2024. "Does continuous disclosure affect the market reaction to mergers and acquisitions announcements?," Pacific-Basin Finance Journal, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:pacfin:v:88:y:2024:i:c:s0927538x24002920
    DOI: 10.1016/j.pacfin.2024.102540
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    More about this item

    Keywords

    Continuous disclosure; Market reaction; Mergers and acquisitions; Abnormal returns;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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