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Review of Financial Studies Vol. 36 No. 12 2023

Mandatory Financial Disclosure and M&A Activity

Marcelo Ortiz1; Caspar David Peter2; Francisco Urzúa I.3; Paolo F. Volpin4

1 Universitat Pompeu Fabra, UPF Barcelona School of Management, and Barcelona School of Economics , Spain · 2 Rotterdam School of Management, Erasmus University , the Netherlands · 3 Bayes Business School, City, University of London , UK · 4 LeBow College of Business, Drexel University and Bayes Business School, City University of London , UK

open access

Abstract

Taking advantage of the implementation of the 2003 European Commission (EC) directive on financial reporting, we explore the impact of mandatory financial disclosure on mergers and acquisitions (M&A). We find robust evidence that the number (and volume) of private firms becoming an M&A target increases with mandatory disclosure. Analyses of cross-industry differences, deal-level data, and post-deal performance indicate that financial disclosure increases M&A activity by reducing information frictions in the market for corporate control.

DOI
10.1093/rfs/hhad052
Volume
36
Issue
12
Pages
4788-4823
Language
en
Sources
bibtex:phds-export.bib crossref openalex

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