The Real Consequence of Information Bundling: Evidence from Takeovers

Abstract

Firms often bundle announcements of corporate events, such as dividend changes and repurchase programs, together with quarterly earnings announcements. Despite the popularity of this disclosure practice, its real consequences have not been examined. This study bridges this gap by providing evidence from the market for corporate control. I find firms that bundle repurchase announcements together with earnings news are 40% more likely to become takeover targets. To alleviate the omitted variable concern, I implement a difference-in-differences experiment exploiting short seller behavior around repurchase announcements. I also use an instrumental variable approach to alleviate self-selection concerns. Finally, a two-stage local treatment effect estimation suggests increased investor attention is a channel for this effect.