The Impact of M&A Delistings on the Information Environment for Industry Peer Firms

54 Pages Posted: 18 Sep 2020 Last revised: 24 Aug 2022

See all articles by Anna Bergman Brown

Anna Bergman Brown

Clarkson University

Donal Byard

City University of New York (CUNY) - Stan Ross Department of Accountancy

Masako N. Darrough

Baruch College - CUNY

Jangwon Suh

New York Institute of Technology

Date Written: August 23, 2022

Abstract

This study documents that M&A delistings are associated with a deterioration in the quality of analysts’ informational environment for industry peer firms, measured by an increase in analysts’ absolute forecast errors and dispersion. This effect persists for up to six quarters and is larger when the delisting target firm contributes relatively more to the industry information environment. Further, consistent with the loss of target firms’ disclosures contributing to these negative information externalities, we find that, among analysts forecasting earnings for an industry peer firm, those who also followed the delisted target firm in the pre-M&A period experience a larger increase in their absolute forecast errors than those who did not. Additional analyses – including a comparison of M&As involving public versus private target firms and changes in analysts’ public and private information for industry peer firms – also provide evidence consistent with the loss of target firms’ public disclosures contributing to the deterioration in the quality of analysts’ information environment for industry peer firms.

Keywords: M&A Delisting, Negative Information Externality, Analyst Information Environment, Industry Peer Firms, Spillovers

JEL Classification: G14, G18, G34, M40

Suggested Citation

Brown, Anna Bergman and Byard, Donal and Darrough, Masako N. and Suh, Jangwon, The Impact of M&A Delistings on the Information Environment for Industry Peer Firms (August 23, 2022). Available at SSRN: https://ssrn.com/abstract=3668063 or http://dx.doi.org/10.2139/ssrn.3668063

Anna Bergman Brown

Clarkson University ( email )

United States

Donal Byard (Contact Author)

City University of New York (CUNY) - Stan Ross Department of Accountancy ( email )

One Bernard Baruch Way, Box B12-225
New York, NY 10010
United States
646-312-3187 (Phone)
646-312-3161 (Fax)

Masako N. Darrough

Baruch College - CUNY ( email )

One Bernard Baruch Way
New York, NY 10010
United States
646 312 3183 (Phone)
646 312 3161 (Fax)

Jangwon Suh

New York Institute of Technology ( email )

1855 Broadway
New York, NY 10023
United States

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