Do investor reactions to merger announcements shape the writing of SEC filings?

44 Pages Posted: 11 Aug 2021 Last revised: 25 Aug 2022

See all articles by Nihat Aktas

Nihat Aktas

WHU - Otto Beisheim School of Management

Eric de Bodt

NHH-Caltech

Can Dogan

WHU - Otto Beisheim School of Management

Date Written: August 24, 2022

Abstract

The way filings of mergers and acquisitions (M&A) with the Security Exchange Commission (SEC) are written might depend on investor reactions to initial public announcements of the deal. The current research aims to test this investor feedback hypothesis in an empirical setting that is free of reverse causality. We therefore manually collect a large sample of SEC documents and quantify their readability. The results are unambiguous: Acquirers write documents with lower readability and file them faster when investors react negatively to the deal announcement. These results are in line with strategic obfuscation efforts and also are robust to alternative empirical choices, such as controlling for content complexity or the firm’s writing style and using an instrumental variables approach.

Keywords: SEC filings, readability, time to file, mergers and acquisitions, investor feedback

JEL Classification: G34, G40

Suggested Citation

Aktas, Nihat and de Bodt, Eric and Dogan, Can, Do investor reactions to merger announcements shape the writing of SEC filings? (August 24, 2022). Available at SSRN: https://ssrn.com/abstract=3901815 or http://dx.doi.org/10.2139/ssrn.3901815

Nihat Aktas (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Eric De Bodt

NHH-Caltech ( email )

18B AVENUE BECHET
Kraainem, 1950
Belgium
+32 475 24 01 69 (Phone)

Can Dogan

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

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