We estimate operating synergies from a unique hand-collected dataset on management's forecasts of merger incremental cash flows. We find that forecasted synergies induce acquirers to make leverage-increasing acquisitions. Institutional investors and bidders' credit rating enhance that relation...

Institutional investors tend to accumulate the shares of firms that announce acquisitions. The tendency to accumulate shares is stronger when the acquirer discloses synergy forecasts, and it is especially strong when the disclosed synergies are higher. This evidence is consistent with the idea...