Explaining the Heterogeneity in Rival Response of Acquisition Targets: Evidence from Media Coverage

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