The Effects of Information Acquisition on Mergers and Acquisitions: Evidence from SEC EDGAR Web Traffic

Abstract

I use SEC EDGAR web traffic as a proxy for information acquisition to study its effects on market reactions to mergers and acquisitions (M&As). Information acquisition about merging firms, industry rivals, and supply-chain firms enhances market informativeness about merger operating synergies. The effects are more pronounced among M&As with more institutional downloads and higher institutional trading activity. Furthermore, information acquisition about merging firms improves the market’s assessment of financial synergies. In addition, non-deal firms with greater information acquisition activity experience an increase in subsequent takeover probability. Overall, this paper demonstrates that information acquisition improves the market’s assessment of value creation in M&As.

Keywords: information acquisition, stock market reaction, market efficiency, mergers and acquisitions

JEL Classification: G14, D81, G34