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Forward-Looking Management Discussions and Analysis Disclosure and Merger and Acquisition Outcomes

Xin Chen et al.

Journal of Accounting Auditing and Finance2025https://doi.org/10.1177/0148558x251390620article
AJG 3ABDC A
Weight
0.37

Abstract

This study examines how the forward-looking Management Discussions and Analysis (MD&A) disclosure affects Merger and Acquisition (M&A) outcomes. Based on a sample of U.S. public firms for the period 1997–2018, we find that firms with more forward-looking information in MD&As are more likely to become M&A targets. The combined returns of the acquirer and the target around the deal announcement are higher in deals involving target firms with more forward-looking MD&A disclosures. The positive effects on M&A outcomes are more pronounced when forward-looking disclosures are deemed more credible and the underlying meanings are expressed more articulately, regardless of the tone. Targets with more forward-looking disclosures are associated with lower bid premiums, higher acquirer returns, and superior acquirer post-acquisition performance, measured by long-term buy-and-hold returns and financial improvements. Our results, robust to quasi-natural experiments and alternative measures, highlight the role of forward-looking information in reducing uncertainty and improving M&A efficiency.

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https://doi.org/https://doi.org/10.1177/0148558x251390620

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@article{xin2025,
  title        = {{Forward-Looking Management Discussions and Analysis Disclosure and Merger and Acquisition Outcomes}},
  author       = {Xin Chen et al.},
  journal      = {Journal of Accounting Auditing and Finance},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1177/0148558x251390620},
}

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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