Mergers Under the Microscope: Analysing Conference Call Transcripts

65 Pages Posted: 27 Feb 2020 Last revised: 12 May 2020

See all articles by Sudipto Dasgupta

Sudipto Dasgupta

Chinese University of Hong Kong and CEPR

Jarrad Harford

University of Washington; European Corporate Governance Institute (ECGI)

Fangyuan Ma

Chinese University of Hong Kong (CUHK) - Department of Finance

Daisy Wang

Ohio State University (OSU) - Department of Finance

Haojun Xie

the Chinese University of Hong Kong

Date Written: January 30, 2020

Abstract

About half of all merger deals between public US acquirers and targets involve a conference call within two days of the deal announcement, in order to communicate information to both acquirer and target shareholders to garner voting support and mitigate legal liability. Calls are associated with positive market reactions and a higher likelihood of deal completion. However, for public targets, only the latter result holds after correcting for endogeneity. Using a probabilistic topic modelling approach, we identify 20 highly interpretable topics as prevalent in the presentations and discussions recorded in the transcripts. The relative importance of several of these in a deal transcript is associated with target characteristics (e.g., whether the target is a private or a public firm), the method of payment, and acquirer characteristics (e.g., governance). The importance of several topics is associated with significant abnormal returns on deal announcement, and with deal completion likelihood.

Keywords: Mergers; Acquisitions; Conference Call; Machine Learning; Probabilistic Topic Modelling

JEL Classification: G34

Suggested Citation

Dasgupta, Sudipto and Harford, Jarrad and Ma, Fangyuan and Wang, Daisy and Xie, Haojun, Mergers Under the Microscope: Analysing Conference Call Transcripts (January 30, 2020). Available at SSRN: https://ssrn.com/abstract=3528016 or http://dx.doi.org/10.2139/ssrn.3528016

Sudipto Dasgupta

Chinese University of Hong Kong and CEPR ( email )

CUHK, Cheng Yu Tung Building, Room 1224
Shatin, NT
Hong Kong
Hong Kong

Jarrad Harford

University of Washington ( email )

Box 353226
Seattle, WA 98195-3226
United States
206-543-4796 (Phone)
206-543-7472 (Fax)

HOME PAGE: http://faculty.washington.edu/jarrad/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Fangyuan Ma (Contact Author)

Chinese University of Hong Kong (CUHK) - Department of Finance ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

Daisy Wang

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

Haojun Xie

the Chinese University of Hong Kong ( email )

Shatin, N.T.
Hong Kong
Hong Kong

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