Who Writes the News? Corporate Press Releases During Merger Negotiations
Kenneth R. Ahern
University of Southern California - Marshall School of Business
University of Michigan - The Stephen M. Ross School of Business
July 5, 2012
Journal of Finance, Forthcoming
Firms have an incentive to manage media coverage to influence their stock price during important corporate events. Using comprehensive data on media coverage and merger negotiations, we find that bidders in stock mergers originate substantially 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.
Number of Pages in PDF File: 98
Keywords: role of media in finance, media coverage, news, press releases, mergers, negotiation
JEL Classification: G14, G34Accepted Paper Series
Date posted: March 16, 2010 ; Last revised: July 14, 2012
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