Does Speculative News Hurt Productivity? Evidence from Takeover Rumors

61 Pages Posted: 19 Jan 2021 Last revised: 7 Jan 2022

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

Peter Limbach

University of Bielefeld; Centre for Financial Research (CFR)

Date Written: December 27, 2021

Abstract

Takeover speculation may hurt productivity because uncertainty and threat of job loss cause anxiety, distraction, and reduced collaboration and morale among employees. Using a large panel of OECD-headquartered firms, we show that firm productivity temporarily declines after announcements of speculative takeover rumors that do not materialize. This productivity dip is more pronounced for targets and for firms in countries with lower levels of employee rights and long-term orientation. Abnormal stock returns mirror these results. The evidence fosters our understanding of potential real effects of speculative news, which are common in financial markets, and the costs of the takeover threat.

Keywords: Distraction, Employee commitment, Employee rights, Fear of job loss, Productivity, Shareholder wealth, Takeover speculation

JEL Classification: D24, G00, G34, J24

Suggested Citation

Andres, Christian and Bazhutov, Dmitry and Cumming, Douglas J. and Limbach, Peter, Does Speculative News Hurt Productivity? Evidence from Takeover Rumors (December 27, 2021). 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

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

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

Paper statistics

Downloads
240
Abstract Views
1,174
rank
177,714
PlumX Metrics