Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
963976 | Journal of International Financial Markets, Institutions and Money | 2015 | 15 Pages |
We examine the textual content of merger and acquisition related SEC filings in an effort to understand the role of managerial attitudes and beliefs in merger negotiations and outcomes. Using a textual algorithm to identify the degree to which filings of bidders and targets exhibit negative/cautious tones vs positive/optimistic tones, we find that bidders employing the most optimistic language in their filings actually experience the worst long-run performance following the transactions. In contrast, bidding managers who appear to acknowledge and understand the risks of the transactions experience relatively better post-merger performance. Thus our analysis of the textual content of merger filings appears to give us a new method for investigating the role of bidder and target attitudes and beliefs on merger outcomes.