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Can Financial Media Sentiment Predict Merger and Acquisition Performance?

Yang, B.; Sun, J.; Guo, M.J.; Fu, J.

Can Financial Media Sentiment Predict Merger and Acquisition Performance? Thumbnail


Authors

B. Yang

J. Sun

J. Fu



Abstract

This paper explores whether and how media serves as an information intermediary in the capital market and predicts value creation from mergers and acquisitions (M&As). Using a sample of 288 M&A deals in the U.S. market from 2000 to 2015, this paper examines whether pre-merger news about acquirers correlates to M&A performance. The empirical evidence shows that a positive media attitude before merger announcements has predictive power for stock returns in both the short and long run. Moreover, media pessimism is associated with higher bid premiums, meaning that acquirers must raise the bid price to offset the negative effects produced by the media. These findings suggest that media news contains information relevant to M&A performance and thus has implications for shareholder wealth.

Citation

Yang, B., Sun, J., Guo, M., & Fu, J. (2019). Can Financial Media Sentiment Predict Merger and Acquisition Performance?. Economic Modelling, 80, 121-129. https://doi.org/10.1016/j.econmod.2018.10.009

Journal Article Type Article
Acceptance Date Oct 23, 2018
Online Publication Date Oct 29, 2018
Publication Date Aug 31, 2019
Deposit Date Oct 23, 2018
Publicly Available Date Oct 29, 2019
Journal Ecological Modelling
Print ISSN 0264-9993
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 80
Pages 121-129
DOI https://doi.org/10.1016/j.econmod.2018.10.009
Public URL https://durham-repository.worktribe.com/output/1310699

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