Does information production explain bidder liquidity after takeovers?

摘要

Purpose - The purpose of this paper is to determine whether information produced in the takeover process or changes in firm characteristics after takeovers affect bidder liquidity. Design/methodology/approach - This paper compares the liquidity changes for bidders that complete their takeovers (successful bidders) and bidders that eventually withdraw their takeover attempts (unsuccessful bidders) to disentangle the information production hypothesis and the firm characteristics hypothesis. The authors use both media mentions and changes in the standard deviation of market model residuals to proxy for the information produced in the takeover process, intraday data to construct the liquidity measures, and regression analyses to examine the determinants of bidder liquidity changes. Findings - This paper finds that unsuccessful bidders experience no less information production than successful bidders during the takeover process, but only successful bidders enjoy liquidity improvements. Once the authors control for the changes in firm characteristics, whether a takeover is successful or not no longer affects bidder liquidity. Moreover, information production reduces information asymmetry for successful Nasdaq bidders but not NYSE bidders. These findings collectively support the firm characteristics hypothesis but also suggest a role of information production on firms with higher information asymmetry. Originality/value - This paper provides the direct evidence that the information produced in the takeover process does not lead to liquidity improvements of the bidders. It also supplements existing literature with a more comprehensive sample and sheds light on how acquisition withdrawals affect firms' liquidity.