Forward-Looking Management Discussions and Analysis Disclosure and Merger and Acquisition Outcomes
This study examines how the forward-looking Management Discussions and Analysis (MD&A) disclosure affects Merger and Acquisition (M&A) outcomes. Based on a sample of U.S. public firms for the period 1997–2018, we find that firms with more forward-looking information in MD&As are more likely to become M&A targets. The combined returns of the acquirer and the target around the deal announcement are higher in deals involving target firms with more forward-looking MD&A disclosures. The positive effects on M&A outcomes are more pronounced when forward-looking disclosures are deemed more credible and the underlying meanings are expressed more articulately, regardless of the tone. Targets with more forward-looking disclosures are associated with lower bid premiums, higher acquirer returns, and superior acquirer post-acquisition performance, measured by long-term buy-and-hold returns and financial improvements. Our results, robust to quasi-natural experiments and alternative measures, highlight the role of forward-looking information in reducing uncertainty and improving M&A efficiency.
Authors
- Haina Shi (ORCID: https://orcid.org/0000-0003-2715-4352)
- Xindong Zhu (ORCID: https://orcid.org/0000-0003-2521-1384)
- Xin Chen (ORCID: https://orcid.org/0000-0001-5697-0872)
- Yi Zhou (ORCID: https://orcid.org/0000-0003-2610-1523)
Institutions
- City University of Hong Kong (HK)
- Southwestern University of Finance and Economics (CN)
- Fudan University (CN)
- Institute of Economics (CN)
Publication Details
- Journal
- Journal of Accounting Auditing & Finance
- Published
- 2025-10-22
- DOI
- https://doi.org/10.1177/0148558x251390620
- Citations
- 1
- Primary Topic
- Auditing, Earnings Management, Governance
- Type
- article
- Field-Weighted Citation Impact
- 3.91