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Who Writes the News? Corporate Press Releases during Merger Negotiations




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    • Kenneth Ahern is at the Marshall School of Business, University of Southern California. Denis Sosyura is at the Ross School of Business, University of Michigan. We thank an anonymous referee, advisor, Associate Editor, Cam Harvey (Editor), Anup Agrawal, Harry DeAngelo, Cesare Fracassi, Todd Gormley, Deborah Gregory, Dirk Jenter, Simi Kedia, Mark Mitchell, Keith Moore, Marian Moszoro, Dana Muir, Stefan Petry, Matt Rhodes-Kropf, Mark Seasholes, Nejat Seyhun, Geoff Tate, Paul Tetlock, conference participants at the 2011 Utah Winter Finance Conference, the 2011 AFA Annual Meeting, the 2011 Napa Conference on Financial Markets Research, the 2011 Financial Intermediation Research Society (FIRS) Conference, the 2011 Caesarea Center Academic Conference (IDC-Herzliya), the 2011 Finance Down Under Conference, the 2011 UCLA Economics Alumni Conference, the 2011 Academy of Behavioral Finance and Economics Meetings, and the 2010 ISB Summer Research Conference in Finance, and seminar participants at ESMT-Berlin, NYU, UCLA-Anderson, University of Alabama, University of Miami, University of Michigan, University of North Carolina-Chapel Hill, University of Southern California, and UVA-Darden. For research assistance we thank Taylor Begley, Jason Pang Jao, Nathish Gokuladas, Tiffany Huang, Nabil Islam, Jaehyuk Jang, Dino Kaknjo, Adam Schubatis, Gregory Seraydarian, and Andrew Zeilbeck.


Firms have an incentive to manage media coverage to influence their stock prices during important corporate events. Using comprehensive data on media coverage and merger negotiations, we find that bidders in stock mergers originate substantially more news stories after the start of merger negotiations, but before the public announcement. This strategy generates a short-lived run-up in bidders' stock prices during the period when the stock exchange ratio is determined, which substantially impacts the takeover price. Our results demonstrate that the timing and content of financial media coverage may be biased by firms seeking to manipulate their stock price.