Signaling under Threat: Evidence of Voluntary Disclosure in Contested Takeovers Forthcoming at Journal of Accounting, Auditing & Finance

42 Pages Posted: 28 Sep 2021

See all articles by Gerald J. Lobo

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business

Kangzhen Xie

Seton Hall University, Stillman School of Business

Claire J. Yan

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Date Written: September 27, 2021

Abstract

We investigate voluntary disclosure strategies in contested takeovers and the associated economic consequences. Using a difference-in-differences research design and propensity score matching, we find that, relative to friendly takeovers, target management in contested takeovers provides more earnings guidance and conveys more good news during the takeover. Moreover, voluntary disclosure helps contested targets negotiate a better offer and the results are stronger for targets with more information asymmetry. Collectively, targets adopt voluntary disclosure and alter their strategies under the threat of contested takeover to enhance their bargaining power. Voluntary disclosure by contested targets serves as a negotiation tactic that potentially benefits target shareholders.

Keywords: voluntary disclosure; contested takeover; takeover consequences

JEL Classification: M10, M41

Suggested Citation

Lobo, Gerald J. and Xie, Kangzhen and Yan, Claire J., Signaling under Threat: Evidence of Voluntary Disclosure in Contested Takeovers Forthcoming at Journal of Accounting, Auditing & Finance (September 27, 2021). Available at SSRN: https://ssrn.com/abstract=3931872 or http://dx.doi.org/10.2139/ssrn.3931872

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States
713-743-4838 (Phone)
713-743-4828 (Fax)

HOME PAGE: http://www.bauer.uh.edu/acct/acctprofile.asp?search=Gerald%20Lobo

Kangzhen Xie

Seton Hall University, Stillman School of Business ( email )

South Orange, NJ 07079
United States

Claire J. Yan (Contact Author)

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

Janice H. Levin Bldg., Room 121
94 Rockafeller Road
Piscataway, NJ 08854-8054
United States

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