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A New Era of Midnight Mergers: Antitrust Risk and Investor Disclosures

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  • John M. Barrios
  • Thomas G. Wollmann

Abstract

Antitrust authorities search public documents to discover anti-competitive mergers. Thus, investor disclosures may alert them to deals that would otherwise go undetected, creating disincentives for managers to divulge certain transactions. We study this behavior in publicly traded US companies. First, we employ a regression discontinuity approach to estimate the effect of mandatory disclosures. We find that releasing information to investors poses antitrust risk. Second, we introduce a method for measuring undisclosed mergers that relies on financial accounting reporting requirements. We find that undisclosed mergers total $1.85 trillion between 2002 and 2016.

Suggested Citation

  • John M. Barrios & Thomas G. Wollmann, 2024. "A New Era of Midnight Mergers: Antitrust Risk and Investor Disclosures," American Economic Journal: Microeconomics, American Economic Association, vol. 16(4), pages 77-111, November.
    • Handle: RePEc:aea:aejmic:v:16:y:2024:i:4:p:77-111
    DOI: 10.1257/mic.20220064
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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