Voluntary Disclosure to Influence Investor Reactions to Merger Announcements: An Examination of Conference Calls

52 Pages Posted: 15 Jul 2010 Last revised: 27 Jan 2011

See all articles by Michael D. Kimbrough

Michael D. Kimbrough

University of Maryland - Robert H. Smith School of Business

Henock Louis

Pennsylvania State University - Smeal College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: July 14, 2010

Abstract

We find that bidders are more likely to hold conference calls at merger announcements when the mergers are financed with stock and when the transactions are large. After controlling for endogeneity, we also find that conference calls are associated with more favorable market reactions to merger announcements. A content analysis of merger-related information releases for a limited subsample indicates that the more favorable reaction is related to the fact that, compared to press releases, conference calls provide a greater volume of information and place greater emphasis on forward-looking details. We find no evidence that the superior announcement returns associated with conference calls subsequently reverse or that conference calls are positively associated with pre-merger announcement abnormal accruals. Overall, the results suggest that managers use conference calls around merger announcements to credibly convey favorable private information to the market.

Keywords: Conference calls, voluntary disclosure, mergers

JEL Classification: D82, G34, M41

Suggested Citation

Kimbrough, Michael D. and Louis, Henock, Voluntary Disclosure to Influence Investor Reactions to Merger Announcements: An Examination of Conference Calls (July 14, 2010). Robert H. Smith School Research Paper No. RHS RHS-06-134. Available at SSRN: https://ssrn.com/abstract=1640152 or http://dx.doi.org/10.2139/ssrn.1640152

Michael D. Kimbrough (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

Robert H. Smith School of Business
College Park, MD 20742-9157
United States
301-405-8222 (Phone)
301-314-9414 (Fax)

Henock Louis

Pennsylvania State University - Smeal College of Business ( email )

University Park, PA 16802-3306
United States
814-865-4160 (Phone)
814-863-8393 (Fax)

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