Heterogeneity in the Information Content of 8-K Disclosures about Private Targets: Acquirer Size and Target Significance

45 Pages Posted: 12 Aug 2020 Last revised: 11 Aug 2021

See all articles by Onur Bayar

Onur Bayar

University of Texas at San Antonio - Carlos Alvarez College of Business

Sougata Das

Montana State University Billings

Emre Kesici

University of Texas at San Antonio

Date Written: June 13, 2020

Abstract

In this paper, we empirically analyze the disclosures required by the Securities Exchange Commission (SEC) for acquisitions of privately-held target firms by public acquirers. We find that 8-K disclosures filed by public acquirers within a week after the announcement date of the takeover of a privately-held target firm have a material impact on the pricing and the trading of the acquirers’ shares around the event date, but only for large acquiring firms. Our empirical analysis of both abnormal returns and abnormal trading volumes supports these findings. We find that for large acquirers, this impact is economically significant for targets classified as “insignificant” by the SEC. However, this effect is insignificant for smaller acquirers, even when the relative deal size is above the threshold levels specified in the SEC’s disclosure requirements. Overall, our results suggest that it may be optimal to further reduce the disclosure costs faced by smaller acquirers in acquisitions of private targets.

Keywords: Takeovers of Private Targets, Public Acquirers, Mergers and Acquisitions, Disclosure Requirements, Information Transparency

JEL Classification: G14, G20, G34

Suggested Citation

Bayar, Onur and Das, Sougata and Kesici, Emre, Heterogeneity in the Information Content of 8-K Disclosures about Private Targets: Acquirer Size and Target Significance (June 13, 2020). Global Finance Journal (GFJ), May 2021, 48, 100559, Available at SSRN: https://ssrn.com/abstract=3649188

Onur Bayar (Contact Author)

University of Texas at San Antonio - Carlos Alvarez College of Business ( email )

The University of Texas at San Antonio
One UTSA Circle
San Antonio, TX 78249
United States
210-458-6837 (Phone)
210-458-6320 (Fax)

Sougata Das

Montana State University Billings ( email )

1500 University Dr
Billings, MT 59101
United States

Emre Kesici

University of Texas at San Antonio ( email )

One UTSA Circle
San Antonio, TX 78249
United States

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