Why Do Firms Bundle Earnings and Acquisition Announcements?
52 Pages Posted: 20 Nov 2017 Last revised: 1 Oct 2019
Date Written: November 16, 2017
An increasing fraction of M&A deals are announced on the same day in which the bidder reports its quarterly earnings, a phenomenon we call ‘bundled’ announcements. Compared to other bids, bundled bids are associated with strongly lower bidder announcement returns. We investigate possible reasons for this practice. Our findings indicate that bundling is a tool of strategic disclosure. Reported earnings of bundling acquirers are lower than those of other bidders. Bidders engage in bundling in moments of high investor attention, good earnings reports in the target industry, and when analysts’ views about the firm are divided.
Keywords: Bundling, Strategic Disclosure, Mergers, Earnings
JEL Classification: G14, G30, G34
Suggested Citation: Suggested Citation