Is There Information in Corporate Acquisition Plans?

Abstract

For many firms, the acquisition process begins with the development of an acquisition plan that is communicated to investors. We construct a comprehen sive sample of acquisition plans to provide novel perspectives on the acquisition process and find that acquisition plans are informative to investors and incremen tally predict subsequent acquisition activity. These results are more pronounced for firms announcing their commitment to acquisitions from an internal pipeline. Acquisition plans improve acquisition performance due to learning from market feedback and alleviate acquisition-related market uncertainty. Communication of acquisition plans does not increase takeover premiums but is less common in more competitive industries.