More is less or less is more? THE MARKET EFFECT OF STRATEGIC SILENCE IN M&A ANNOUNCEMENTS
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2022-06-27
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en
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Abstract
Organizations rely heavily on investors to require the resources they need. Different tactics for influencing investors and stakeholders are used in organizational impression management. The role of strategic silence within the impression management theory is investigated within this study. The purpose of strategic silence is to influence investors or stakeholders by not disclosing all of the information available to the organization. This study examines the effect strategic silence has within M&A press announcements on cumulative abnormal returns. As an interaction effect on the relationship between strategic silence and cumulative abnormal return, this study also analyzes market overvaluation and information asymmetry. To determine the degree of informativeness for each M&A press announcement, a measurement has been developed using the results of the semi-supervised Latent Dirichlet Allocation. A multiple regression analysis is performed with the results of the LDA and the data of S&P500 companies between 2010 and 2021. There is no clear evidence found within this study that states proofs that strategic silence has an effect on cumulative abnormal return. However, strategic silence might be a good option if an organization is able to solve the problems internally and can prevent negative news from spreading.
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Faculteit der Managementwetenschappen