With the increasing requirements for information disclosure in the capital market, earnings conferences have become an important way for investors to obtain information about the company's operating conditions and strategic direction.
Based on a digital perspective, our paper uses China A-share listed companies from 2010 to 2022 as a sample to examine how digital mergers and acquisitions (M&A) affects the use of digital-related terms in post-M&A earnings conferences and whether these terms are consistent with the company's actual digital innovation capabilities.
We find that management significantly increases digital-related disclosures after digital M&A; however, these disclosures are not aligned with actual improvements in innovation capabilities. This misalignment results from excessive and inefficient R&D investments following digital M&A. This is especially true when stock prices are overvalued, industry competition is weak, industry spillover effects are strong and analyst attention is low. The governance mechanisms we propose include strengthening external supervision and formulating a reasonable compensation system.
By analyzing the changes in communication strategies in earnings conferences, our paper reveals the strategic behavior of management after M&A. These results highlight the misalignment between digital-related disclosures and innovation outcomes and suggest that management may use symbolic language to meet investor expectations following digital M&A.
