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Who writes the news? Corporate press releases during merger negotiations (2014)
| Venue: | Journal of Finance |
| Citations: | 12 - 1 self |
BibTeX
@ARTICLE{Ahern14whowrites,
author = {Kenneth R. Ahern and Denis Sosyura},
title = {Who writes the news? Corporate press releases during merger negotiations},
journal = {Journal of Finance},
year = {2014},
pages = {241--291}
}
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Abstract
Firms have an incentive to manage media coverage to influence their stock prices during important corporate events. Using comprehensive data on media coverage and merger negotiations, we find that bidders in stock mergers originate substan-tially more news stories after the start of merger negotiations, but before the public announcement. This strategy generates a short-lived run-up in bidders ’ stock prices during the period when the stock exchange ratio is determined, which substantially impacts the takeover price. Our results demonstrate that the timing and content of financial media coverage may be biased by firms seeking to manipulate their stock price. THE RELATION BETWEEN INFORMATION and stock prices is central to finance, dat-ing back to at least Fama et al. (1969). Key to this relation is the financialmedia, which serves as the main channel through which information is disseminated to investors. Recent research shows that media coverage drives market trading (Barber and Odean (2008), Engelberg and Parsons (2011)) and affects prices
Keyphrases
merger negotiation corporate press stock price medium coverage short-lived run-up public announcement market trading important corporate event recent research news story takeover price stock merger main channel stock exchange ratio comprehensive data bidder stock price financial medium coverage relation information
