Voluntary disclosure to influence investor reactions to merger announcements: An examination of conference calls

Michael D. Kimbrough, Henoch Louis

Research output: Contribution to journalArticle

39 Scopus citations

Abstract

We find that bidders are more likely to hold conference calls at merger announcements when the mergers are financed with stock and when the transactions are large. After controlling for endogeneity, we also find that conference calls are associated with more favorable market reactions to merger announcements. A content analysis of merger-related information releases for a limited subsample indicates that the more favorable reaction is related to the fact that, compared to press releases, conference calls provide a greater volume of information and place greater emphasis on forward-looking details. We find no evidence that the superior announcement returns associated with conference calls subsequently reverse or that conference calls are positively associated with pre-merger announcement abnormal accruals. Overall, the results suggest that managers use conference calls around merger announcements to credibly convey favorable private information to the market.

Original languageEnglish (US)
Pages (from-to)637-667
Number of pages31
JournalAccounting Review
Volume86
Issue number2
DOIs
StatePublished - Mar 1 2011

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

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