Who Writes the News? Corporate Press Releases During Merger Negotiations

98 Pages Posted: 16 Mar 2010 Last revised: 29 Jan 2014

Kenneth R. Ahern

University of Southern California - Marshall School of Business; National Bureau of Economic Research (NBER)

Denis Sosyura

University of Michigan, Stephen M. Ross School of Business

Date Written: January 28, 2014

Abstract

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.

Keywords: role of media in finance, media coverage, news, press releases, mergers, negotiation

JEL Classification: G14, G34

Suggested Citation

Ahern, Kenneth R. and Sosyura, Denis, Who Writes the News? Corporate Press Releases During Merger Negotiations (January 28, 2014). Journal of Finance, Vol. 69, No. 1, 2014. Available at SSRN: https://ssrn.com/abstract=1570530 or http://dx.doi.org/10.2139/ssrn.1570530

Kenneth Robinson Ahern (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

HOME PAGE: http://www-bcf.usc.edu/~kahern/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Denis Sosyura

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

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