This study investigates the subtle role of strategic communication in the context of mergers and acquisitions (M&As), focusing on how the topical orientation of managerial discourse influences investor perceptions and evaluations.
We develop a tailored dictionary of terms to conduct an in-depth examination of M&A conference calls, a relatively understudied form of voluntary disclosure. Using an algorithmic approach to linguistic analysis, we capture the strategic orientations of managerial discourse from a sample of 716 M&A call transcripts during the period 2013–2018.
This research shows that when top managers emphasize operational aspects over financial details during M&A calls, the acquiring firms are more likely to experience positive cumulative abnormal returns (CAR). However, overemphasizing operational aspects leads to negative CAR. It also shows that managerial focus on future prospects during these calls is positively associated with the acquirer CAR.
This study integrates insights from the acquisition literature with research in communications and linguistics, advancing the view that executive communication is not solely a mechanism for disclosing information but also a strategic act. In particular, it highlights that the orientation of communication is as consequential as its substantive content.
