Mandatory Financial Disclosure and M&A Activity

Ortiz M., Marcelo; Peter, Caspar David; Urzúa I., Francisco; Volpin, Paolo F.

doi:10.2139/ssrn.3768349

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Mandatory Financial Disclosure and M&A Activity

Forthcoming Review of Financial Studies

83 Pages Posted: 11 Mar 2021 Last revised: 12 Jun 2023

See all articles by Marcelo Ortiz M.

Marcelo Ortiz M.

Universitat Pompeu Fabra; Universitat Pompeu Fabra (UPF) - Barcelona School of Management; Barcelona School of Economics

Caspar David Peter

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Paolo F. Volpin

Drexel University - Bennett S. LeBow College of Business; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); City University London - Faculty of Finance

Date Written: June 12, 2023

Abstract

Taking advantage of the implementation of the 2003 European Commission (EC) directive on financial reporting, we explore the impact of mandatory financial disclosure on mergers and acquisitions (M&A). We find robust evidence that the number (and volume) of private firms becoming an M&A target increases with mandatory disclosure. The analyses of cross-industry differences, deal-level data, and post-deal performance indicate that financial disclosure increases M&A activity by reducing information frictions in the market for corporate control.

Keywords: Financial disclosure; mergers and acquisitions; private firms

JEL Classification: G34, G14

Suggested Citation: Suggested Citation

Ortiz M., Marcelo and Peter, Caspar David and Urzua, Francisco and Volpin, Paolo F., Mandatory Financial Disclosure and M&A Activity (June 12, 2023). Forthcoming Review of Financial Studies, Available at SSRN: https://ssrn.com/abstract=3768349 or http://dx.doi.org/10.2139/ssrn.3768349