Treading Lightly: Peer Firms' Strategic Nondisclosure during Merger Antitrust Reviews

47 Pages Posted: 3 Apr 2025

See all articles by Farzana Afrin

Farzana Afrin

California State University, Fullerton; Boston College

Natalie Berfeld

Boston College - Carroll School of Management

Mark Piorkowski

Indiana University - Kelley School of Business

Lauren Vollon

University of Notre Dame - Mendoza College of Business

Benjamin Yost

Boston College - Department of Accounting

Date Written: March 15, 2025

Abstract

We study whether and how firms strategically alter their disclosures to influence the regulatory outcomes of mergers that involve their peers. We hypothesize and find evidence that industry peers who stand to benefit from market consolidation refrain from issuing positive news press releases during antitrust review periods, as such disclosures may signal peers' market power or profitability and trigger increased antitrust scrutiny. Strategic nondisclosure is concentrated among peers who are likely to benefit most from the merger (i.e., peers with a high market share, positive market reactions to the merger announcement, and improved ex-post operating performance). Moreover, we find that peers' strategic nondisclosure is associated with faster termination of the review, suggesting that the strategy facilitates merger completion. Our findings extend prior studies on disclosure spillovers by showing that firms incorporate regulatory events involving their peers into their disclosure decisions.

Keywords: mergers and acquisitions, antitrust, peer firm disclosures

JEL Classification: D62, D83, G34, K21, L40, M41

Suggested Citation

Afrin, Farzana and Berfeld, Natalie and Piorkowski, Mark and Vollon, Lauren and Yost, Benjamin, Treading Lightly: Peer Firms' Strategic Nondisclosure during Merger Antitrust Reviews (March 15, 2025). Available at SSRN: https://ssrn.com/abstract=5179610 or http://dx.doi.org/10.2139/ssrn.5179610

Farzana Afrin

California State University, Fullerton ( email )

Fullerton, CA
United States

Boston College

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Natalie Berfeld

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Mark Piorkowski

Indiana University - Kelley School of Business ( email )

1309 E 10th Street, Hodge Hall 4100
Bloomington, IN 47405
United States

Lauren Vollon

University of Notre Dame - Mendoza College of Business ( email )

Notre Dame, IN 46556
United States

Benjamin Yost (Contact Author)

Boston College - Department of Accounting ( email )

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

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