Heterogeneity in the Information Content of 8-K Disclosures about Private Targets : Acquirer Size and Target Significance

In this paper, we empirically analyze the disclosures required by the Securities Exchange Commission (SEC) for acquisitions of privately-held target firms by public acquirers. We find that 8-K disclosures filed by public acquirers within a week after the announcement date of the takeover of a privately-held target firm have a material impact on the pricing and the trading of the acquirers' shares around the event date, but only for large acquiring firms. Our empirical analysis of both abnormal returns and abnormal trading volumes supports these findings. We find that for large acquirers, this impact is economically significant for targets classified as “insignificant” by the SEC. However, this effect is insignificant for smaller acquirers, even when the relative deal size is above the threshold levels specified in the SEC's disclosure requirements. Overall, our results suggest that it may be optimal to further reduce the disclosure costs faced by smaller acquirers in acquisitions of private targets