Bidder earnings forecasts in mergers and acquisitions
Accepted version
Peer-reviewed
Repository URI
Repository DOI
Change log
Authors
Amel-Zadeh, A
Meeks, G
Abstract
This study finds that pro-forma earnings forecasts by bidding firms during acquisitions are associated with a higher likelihood of deal completion, expedited deal closing, and with a lower acquisition premium − but only in stock-financed acquisitions. Analysts also respond to these forecasts by revising their forecasts for the bidder upward. However, the benefits of forecast disclosure only accrue to bidders with a strong forecasting reputation prior to the acquisition. Explaining why not all bidders forecast, we document a higher likelihood of post-merger litigation and CEO turnover for bidders with a weak forecasting reputation and for those that underperform post-merger.
Description
Keywords
3501 Accounting, Auditing and Accountability, 3502 Banking, Finance and Investment, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour
Journal Title
Journal of Corporate Finance
Conference Name
Journal ISSN
0929-1199
Volume Title
58
Publisher
Elsevier BV