Private Information in Mergers and Acquisitions: Non-Deal Roadshows, Value Creation, and Financing Choices

Abstract

This study explores the relationship between non-deal roadshows (NDRs), the medium of exchange used in mergers and acquisitions (M&As) and the value created by these significant corporate events. NDRs can reduce asymmetric information, which is a significant driver of merger announcement returns, the choice of merger financing, and the acquisition bid premium. I show that NDR activity is important in explaining the cross-sectional variation of the excess returns around M&As and the acquisition bid premium. NDRs are also significant to understanding the medium of exchange, and their relevance is more pronounced when the firms involved have higher levels of asymmetric information and uncertainty. My findings suggest that NDRs convey relevant information about acquiring and target firms in M&A transactions. This paper identifies and measures distinct firm-specific outcomes of NDR activity that had yet to be studied.