Target Social Media Presence and Its Effects on Acquirers’ Decision

Abstract

Our objective is to determine whether firms’ presence on social media improves the decision-making process in mergers and acquisitions (M&As), and thus the quality and performance of the transaction. Based on a sample of 309 domestic mergers carried out by Canadian companies between 2012 and 2016, the empirical evidence strongly supports our hypothesis as we find that the active presence of target firms on social media enhances the likelihood of M&A completion. In addition, M&As carried out by firms active on social media are also more likely to create value. These findings suggest that information posted on social media helps firms identify the best partnerships, i.e., those target firms with which the acquiring firms will be able to work in synergy.