Dispersion in news sentiment and M&As outcomes

We suggest that dispersion in news sentiment, representing the dispersion in informative M&A performance forecasts, effectively captures M&A information uncertainty, disseminates information about transaction risks, and enhances investors’ ability to discern high-risk acquisition attempts. We find that consistent with the information uncertainty perspective, dispersion in news sentiment is associated with higher change in the acquirer's information uncertainty, lower M&A announcement return, and lower M&A completion probability. Examining the underlying channel, we show that media reduces information asymmetry between managers and investors and managers listen to the market due to the loss of reputational capital. Our findings are robust to additional analysis, endogeneity test, and robustness check. Overall, we argue that media can function as an alternative channel for corporate governance through dispersion in news sentiment.