Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1002925 | Research in International Business and Finance | 2014 | 25 Pages |
•Study voluntary information disclosure in the form of conference calls by UK firms.•Conference calls facilitate the smoother transmission of M&A-related information.•Conference calls reduce informed trading through option markets before M&A events.•Firms without equity options should be more willing to hold conference calls.
This paper examines conference call meetings held around merger and acquisition (M&A) announcements in the UK market. Our main findings indicate that conference calls not only facilitate the smoother transmission of M&A-related information in the stock market and smooth the rate of the information flow to the market, but also they reduce informed trading through option markets before M&A events. We also find that there is an inverse relation of analysts’ forecast error and conference call probability, that firms initiate conference calls during M&As when their transactions are large and are facing liquidity constraints, and that the probability of a firm holding a conference call around an M&A is strongly and inversely related to the existence of traded equity options on its stock.