The Effects of Information Acquisition in M&As: Evidence from SEC EDGAR Web Traffic

Abstract

This paper studies the effects of information acquisition in mergers and acquisitions (M&As). Information acquisition, proxied by downloads of filings on the SEC EDGAR website, improves the market’s assessment of deal synergies and the valuation of non-deal peer firms. Specifically, the information acquisition about merging firms enhances the relation between combined announcement-period abnormal returns and post-merger operating performance of the combined firm. The effects are stronger in deals that experience high institutional downloads and high trading volume. Furthermore, information acquisition in peer firms around M&A announcements strengthens the link between their short-term abnormal stock returns and long-term operating performance. Non-deal firms with greater download activity experience an increase in price informativeness and subsequent takeover probability. Overall, this paper provides supportive evidence that information acquisition improves the market’s assessment of the merger synergies and valuation on merger-related firms.