Strategic Communication in M&A Conference Calls: Topic Modelling Analysis of Transcripts

Abstract

We study the role of conference calls in mergers and acquisitions (M&As) on perceived deal value and deal completion. We analyze how managers’ discretionary disclosure choices, particularly the precision of information shared, are associated with investor perceptions and deal outcomes in equilibrium. To measure disclosure precision, we adopt topic modelling to analyze call transcripts. We find that depending on the managerial objectives of disclosure in different types of deals, precise disclosures (“hard” information) are related to better market outcomes, while less precise disclosure (“soft” information) are linked to higher deal completion rates, despite potential negative reactions from acquirer shareholders. Our findings underscore the importance of strategic communication in M&A contexts. 

Keywords: Strategic disclosure, Mergers and acquisitions, Conference calls, Information content