Abstract
AbstractWe examine the effect of negative news disclosures on acquisition decisions of firms. Using textual analysis of company press releases, we find that the percentage of negative news disclosed by a firm reduces its probability of acquisitions. However, for firms that do undertake acquisitions, the percentage of negative news disclosed is positively related to announcement‐period abnormal returns. Consistent with theoretical predictions, this positive relationship is more pronounced for acquirers with low pay‐performance sensitivity and those operating in concentrated industries. Overall, our results suggest that when managerial reputation concerns are high following negative news development, they make more prudent acquisition decisions.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
