Does Speculative News Hurt Productivity? Evidence from Takeover Rumors

71 Pages Posted: 19 Jan 2021 Last revised: 9 May 2024

See all articles by Christian Andres

Christian Andres

WHU - Otto Beisheim School of Management

Dmitry Bazhutov

BUW - Schumpeter School of Business and Economics

Douglas J. Cumming

Florida Atlantic University; Birmingham Business School; European Corporate Governance Institute (ECGI)

Gerrit Köchling

Technical University of Dortmund

Peter Limbach

University of Bielefeld; Centre for Financial Research (CFR)

Multiple version iconThere are 2 versions of this paper

Date Written: January 19, 2023

Abstract

We show that productivity at both the firm and employee (i.e., analyst and inventor) level
temporarily declines upon announcements of takeover rumors that do not materialize. Such
speculative news may hurt productivity because uncertainty and threat of job loss cause anxiety,
distraction, and reduced commitment among employees and managers. Consistently, we
observe a more pronounced productivity dip for rumored targets and when the likelihood of job
loss is higher. Firm performance mirrors these results. We find no indication of reverse
causality. The evidence fosters our understanding of potential real effects of speculative
financial news and the costs of takeover threats.

Keywords: Employee commitment and distraction, Employee and firm productivity, Firm performance, Takeover speculation, Threat of job loss

JEL Classification: D24, G00, G34, J24

Suggested Citation

Andres, Christian and Bazhutov, Dmitry and Cumming, Douglas J. and Köchling, Gerrit and Limbach, Peter, Does Speculative News Hurt Productivity? Evidence from Takeover Rumors (January 19, 2023). European Corporate Governance Institute – Finance Working Paper No. 884/2023, Available at SSRN: https://ssrn.com/abstract=3739509 or http://dx.doi.org/10.2139/ssrn.3739509

Christian Andres (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Dmitry Bazhutov

BUW - Schumpeter School of Business and Economics ( email )

Gaußstraße 20
42097 Wuppertal
Germany

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://sites.google.com/view/douglascumming/bio?authuser=0

Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://https://ecgi.global/users/douglas-cumming

Gerrit Köchling

Technical University of Dortmund ( email )

Friedrich-Wöhler-Weg 6
Dortmund, 44227
Germany

Peter Limbach

University of Bielefeld ( email )

Centre for Financial Research (CFR) ( email )

Albertus-Magnus-Platz
Köln, 50923
Germany

HOME PAGE: http://www.finance.uni-koeln.de

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