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

49 Pages Posted: 18 Sep 2020 Last revised: 12 Jul 2021

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: July 6, 2021

Abstract

This study examines whether M&A delistings are associated with a deterioration in the quality of analysts’ information environment for industry peer firms. Delisted firms cease to trade and provide stand-alone financial reports, depriving analysts of potentially useful industry-level information for analyzing industry peer firms. We document that M&A delistings are associated with increases in absolute forecast errors and dispersion for industry peer firms that persist for at least six quarters. This effect is larger when the delisted firm is relatively more important to its industry. Additional analyses – including analyses of M&As involving private target firms, non-completed M&As, and an analyst-level comparison of analysts who follow versus those who do not follow delisted firms – suggest that our results (1) reflect a loss of useful information to analysts, and (2) are robust to endogeneity bias from correlated omitted industry shocks. Our results provide evidence of broader industry-wide informational effects of M&A delistings.

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 Analysts’ Information Environment for Industry Peer Firms (July 6, 2021). 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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
86
Abstract Views
567
rank
358,616
PlumX Metrics