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

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

  • John M. Barrios
  • Thomas G. Wollmann
American Economic Journal: Microeconomics (Forthcoming)

Abstract

Antitrust authorities search public documents to discover anticompetitive 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 U.S. 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.

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