Conference Calls Around Merger and Acquisition Announcements: Do They Reduce Information Asymmetry? UK Evidence
Research in International Business and Finance, vol. 30, pp. 148-172, 2014.
53 Pages Posted: 6 Aug 2013 Last revised: 28 May 2014
Date Written: June 1, 2013
This paper examines conference call meetings held around merger and acquisition (M&A) announcements in the UK market. Our main findings indicate that conference calls not only facilitate the smoother transmission of M&A-related information in the stock market and smooth the rate of the information flow to the market, but also they reduce informed trading through option markets before M&A events. We also find that there is an inverse relation of analysts’ forecast error and conference call probability, that firms initiate conference calls during M&As when their transactions are large and are facing liquidity constraints, and that the probability of a firm holding a conference call around an M&A is strongly and inversely related to the existence of traded equity options on its stock.
Keywords: Mergers and Acquisitions, Conference Calls, Asymmetric Information, Option Markets, Corporate Governance
JEL Classification: G1, G14, G34
Suggested Citation: Suggested Citation