Firm Visibility and Acquisition Likelihood: Evidence from Seeking Alpha Coverage

60 Pages Posted: 25 Jul 2023 Last revised: 9 Apr 2025

See all articles by Pu Gu

Pu Gu

Boston College

Benjamin Yost

Boston College - Department of Accounting

Yuan Zou

Harvard University - Business School (HBS)

Date Written: July 18, 2023

Abstract

This study investigates whether social media coverage influences a firm’s likelihood of being acquired. Specifically, we hypothesize that coverage on the Seeking Alpha platform reduces search frictions for low-visibility firms by drawing attention from potential acquirers and M&A advisers (i.e., investment banks), increasing the likelihood of acquisition. Employing a novel setting in which Seeking Alpha contributors were incentivized to write articles about small firms, which historically had received relatively little coverage, we find evidence consistent with our prediction. Moreover, the increased coverage leads to deals between acquirers and targets that are (1) more geographically distant from each other, and (2) less likely to be in the same industry, consistent with a firm visibility channel. We validate our inference by showing such coverage leads to increased financial statement downloads by potential acquirers and investment banks. Overall, our findings point to social media serving an important role in reducing search frictions in the market for corporate control by enhancing managers’ awareness of potential investment opportunities.

Keywords: Firm visibility, mergers and acquisitions, Seeking Alpha, social media

JEL Classification: D83, G34, M15, M41

Suggested Citation

Gu, Pu and Yost, Benjamin and Zou, Yuan, Firm Visibility and Acquisition Likelihood: Evidence from Seeking Alpha Coverage (July 18, 2023). Available at SSRN: https://ssrn.com/abstract=4514755 or http://dx.doi.org/10.2139/ssrn.4514755

Pu Gu

Boston College ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Benjamin Yost

Boston College - Department of Accounting ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Yuan Zou (Contact Author)

Harvard University - Business School (HBS)

Soldiers Field Road
Morgan 362
Boston, MA 02163
United States

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