Is There Information in Corporate Acquisition Plans?
For many firms, the acquisition process begins with the development of an acquisition plan that is communicated to investors. Using a novel dataset, we provide the first study of acquisition plans and offer new perspectives on the acquisition process. We find that acquisition plan announcements are informative and incrementally predict subsequent acquisition activity. These results are more pronounced for firms announcing commitment to acquisitions from an internal pipeline. Acquisition plans improve acquisition performance due to learning from market feedback and reduce acquisition-related uncertainty. Communication of acquisition plans does not increase takeover premiums but is less common in more competitive industries.
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