Rights statement: This is an Accepted Manuscript of an article published by Taylor & Francis in The European Journal of Finance on 24/11/2019, available online: https://www.tandfonline.com/doi/full/10.1080/1351847X.2019.1694959
Accepted author manuscript, 609 KB, PDF document
Available under license: CC BY-NC: Creative Commons Attribution-NonCommercial 4.0 International License
Final published version
Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
}
TY - JOUR
T1 - 10-K Filing length and M&A returns
AU - Chircop, Justin
AU - Tarsalewska, Monika
N1 - This is an Accepted Manuscript of an article published by Taylor & Francis in The European Journal of Finance on 24/11/2019, available online: https://www.tandfonline.com/doi/full/10.1080/1351847X.2019.1694959
PY - 2020/2/29
Y1 - 2020/2/29
N2 - This study examines the association between 10-K filing length and M&A returns. We posit that 10-K filing length influences shareholder information acquisition and processing costs. Longer 10-K filings reduce information acquisition costs by making more information about the target available to the shareholder, but may increase information processing costs by increasing the difficulty of extracting that information. Which effect dominates ultimately determines the association between 10-K filing length and M&A returns. We find that 10-K filing length is positively related to M&A returns, suggesting that the reduction in information acquisition costs dominates the increase in information processing costs. This relation is stronger when the acquirer has limited access to private information about the target, and when 10-K filings contain text denoting risk. The relation is weaker when 10-K filings contain complex text and financial statements exhibiting high accounting quality.
AB - This study examines the association between 10-K filing length and M&A returns. We posit that 10-K filing length influences shareholder information acquisition and processing costs. Longer 10-K filings reduce information acquisition costs by making more information about the target available to the shareholder, but may increase information processing costs by increasing the difficulty of extracting that information. Which effect dominates ultimately determines the association between 10-K filing length and M&A returns. We find that 10-K filing length is positively related to M&A returns, suggesting that the reduction in information acquisition costs dominates the increase in information processing costs. This relation is stronger when the acquirer has limited access to private information about the target, and when 10-K filings contain text denoting risk. The relation is weaker when 10-K filings contain complex text and financial statements exhibiting high accounting quality.
KW - 10-K filing length
KW - mergers and acquisitions
KW - information acquisition costs
KW - information processing costs
KW - market returns
U2 - 10.1080/1351847X.2019.1694959
DO - 10.1080/1351847X.2019.1694959
M3 - Journal article
VL - 26
SP - 532
EP - 553
JO - European Journal of Finance
JF - European Journal of Finance
SN - 1351-847X
IS - 6
ER -