University of Sussex
1-s2.0-S0929119923001141-main.pdf (2.45 MB)

The information value of M&A press releases

Download (2.45 MB)
journal contribution
posted on 2023-09-15, 07:43 authored by Yang CaoYang Cao, Florian Kiesel, Henry Leung

How do managers comment on merger transactions? By analyzing the initial public announcements of mergers and acquisitions (M&As) from 1995 through 2020 and extracting the linguistic sentiment from statements made by managers of target and acquirer firms, we provide new evidence on the informational value of M&A disclosures. We find that positive sentiment by the target firm results in positive returns for the target. However, when the target firm disagrees with the sentiment of the acquirer, this results in lower returns for the target. Further, when the target displays positive sentiment, this increases the likelihood of merger completion and shortens the time to completion of the deal. We decompose acquirer sentiment into manipulative and fundamental components and demonstrate that acquirer CEOs with low confidence produce M&A statements that are more manipulative. This suggests that, while sentiment in M&A disclosures contains information about fundamentals and managerial attitudes, it can be manipulated to protect the personal interests of managers.


Publication status

  • Published

File Version

  • Published version


Journal of Corporate Finance




Elsevier BV



Article number


Department affiliated with

  • Business and Management Publications
  • Accounting and Finance Publications

Full text available

  • Yes

Peer reviewed?

  • Yes