Mandatory Disclosure and Takeovers: Evidence from Private Banks

56 Pages Posted: 18 Oct 2022

See all articles by Urooj Khan

Urooj Khan

University of Texas at Austin - Red McCombs School of Business

Doron Nissim

Columbia University - Columbia Business School

Jing Wen

City University of Hong Kong

Date Written: October 11, 2022

Abstract

We investigate the role of mandatory financial disclosure in the takeover market for privately held U.S. banks. Public financial information plays a critical role in the takeover market as acquirers rely on it to identify potential targets and conduct preliminary due diligence. Using a difference-in-differences research design around a regulatory disclosure mandate that changed the frequency and granularity of financial disclosure for certain banks, we find that banks with more frequent and richer disclosure are more likely to be targeted in M&A transactions than other banks. Furthermore, the impact of the disclosure mandate is less severe for banks that experience a less significant loss of publicly available information. Acquirers earn higher bid-announcement returns when targeting banks with richer and more frequent disclosures. Overall, we shed light on the critical role of mandatory financial reporting in the takeover market.

Keywords: Mandatory Disclosure, Mergers and Acquisitions, Private Banks, Regulatory Reports, Takeovers

JEL Classification: D83, G21, G28, M41

Suggested Citation

Khan, Urooj and Nissim, Doron and Wen, Jing, Mandatory Disclosure and Takeovers: Evidence from Private Banks (October 11, 2022). Available at SSRN: https://ssrn.com/abstract=4244631 or http://dx.doi.org/10.2139/ssrn.4244631

Urooj Khan

University of Texas at Austin - Red McCombs School of Business ( email )

Austin, TX 78712
United States

HOME PAGE: http://https://www.mccombs.utexas.edu/Directory/Profiles/Khan-Urooj

Doron Nissim

Columbia University - Columbia Business School ( email )

NY
United States
212-854-4249 (Phone)

Jing Wen (Contact Author)

City University of Hong Kong ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
+852 34425205 (Phone)

HOME PAGE: http://https://sites.google.com/view/jwen

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

Paper statistics

Downloads
82
Abstract Views
252
Rank
445,244
PlumX Metrics