Does Media Affect the Rival Response of Acquisition Targets?

This paper studies the role of media in explaining the heterogeneity in the rival response of acquisition targets. We find robust evidence that the rival response of acquisition targets is positively associated with rivals’ media coverage. Furthermore, we show that media coverage increases the probability of rivals being targeted in the future and the expected returns conditional on future acquisitions, supporting the acquisition probability hypothesis. Moreover, we show that the impact of media coverage on the rival response is achieved through the information asymmetry channel, corporate governance channel, default risk channel, and liquidity channel. Overall, this study offers new insights into the real impact of media on M&As by focusing on its impact on rival firms