Mergers Under the Microscope: Analysing Conference Call Transcripts

Abstract

M&A conference calls held shortly after deal announcement are associated with positive market reactions, higher deal completion rates, and reduced information asymmetry, consistent with selective disclosure. However, the impact disappears when the call decision is instrumented, i.e., when the decision is presumably uncorrelated with the underlying deal value. Analysis of call content shows that managers can control the informativeness of conference calls by emphasizing different types of topics, such as soft versus hard information topics. Our findings highlight the selective transparency of M&A call disclosures, shedding light on the information environment that investors navigate when assessing merger values.

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

JEL Classification: G34