Conference calls around merger and acquisition announcements: Do they reduce information asymmetry? UK Evidence |
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| Institution: | 1. University of Bristol, UK;2. Zagazig University, Egypt;3. University of Helwan, Egypt;1. ESSEC Business School, 3, avenue Bernard Hirsch, 95021 Cergy-Pontoise, France;2. Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, ON M5S 3E6, Canada;1. International School of Business&Finance, Sun Yat-sen University, China;1. Weatherhead School of Management, Case Western Reserve University 11119 Bellflower Road, Cleveland, OH 44106Papua New Guinea;2. Baruch College, City University of New York. 55 Lexington Avenue, New York, NY 10010 |
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| Abstract: | 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. |
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| Keywords: | Mergers and acquisitions Conference calls Asymmetric information Option markets Corporate governance |
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