Enforcing Disclosure Compliance in Mergers and Acquisitions
Evidence from China
Bibliographic Data
| ID | 19446563 |
|---|---|
| Authors | Junzi Zhang (0000-0002-5086-0063, University of Bristol, corresponding author), Paweł Biliński (0000-0002-4724-4542, Bayes Business School, City, University of London), Ivana Raonic (0000-0003-2982-8445, Bayes Business School, City, University of London), James Ryans (0000-0002-9699-4913, London Business School) |
| Year | 2025 |
| Volume | 34 |
| Issue | 2 |
| Pages | 751-784 |
| Publication date | 2025-03-15 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | European Accounting Review (JOURNAL) |
| Journal identifiers | ISSN: 0963-8180 • E-ISSN: 1468-4497 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/09638180.2023.2273380 |
| OpenAlex | W4388487798 |
| Language | EN |
| References cited | 98 |
This study examines how enforcement of acquisition disclosure regulation affects investors' assessment of the transactions' quality at merger and acquisition (M&A) announcements.Using a novel sample of comment letters on acquisition filings by public companies in China, we document that regulatory requests for disclosure enhancement and clarifications are more common on lower quality transactions obfuscated by weaker disclosure as evidenced by (i) a lower likelihood of the deal closing, and if the deal does close, lower post-deal firm profitability; and, (ii) a greater likelihood of subsequent goodwill impairment.Using entropy balancing matching, we document that transactions that receive comment letters associate with significant negative bidder announcement returns suggesting that regulatory actions reveal new information that aids investors to identify lower quality deals.The negative price effect is greater when comment letters have more acquisition-specific comments, compared to letters with more comments on general accounting and governance issues.Our results showcase that enforcing disclosure compliance in M&A filings aids investors in assessing the quality of M&A transactions at the time when the filings are made public
Business · Corporate governance · Enforcement · Goodwill · Mergers and acquisitions · Profitability index · Public disclosure · Auditing, Earnings Management, Governance · Corporate Finance and Governance · Law · Risk Management in Financial Firms · Accounting · Finance
The Status Quo Crisis
Takeover Bids, The Free-Rider Problem, and the Theory of the Corporation
Tunneling
Common risk factors in the returns on stocks and bonds
The law and economics of self-dealing
The Theory of Economic Regulation
A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity
The New Political Economy of the Macroprudential Ideational Shift
Selection on Observed and Unobserved Variables
When Cultures Collide
Entropy Balancing for Causal Effects
"The Market for "Lemons
Credibility and Distributional Effects of International Banking Regulations
Endogenous Innovation in the Theory of Growth
| Highly cited | No |
|---|