Do Pre-Announcement Face-to-Face Interactions Increase the Returns to Acquisitions? Evidence from Smartphone Geolocational Data Marco Testoni,a Mariko Sakakibara,b Keith Chenc May 30, 2019 Information asymmetries make acquisitions risky, reducing firms’ ability to gain from these transactions. We test whether face-to-face interactions with the target’s employees before the acquisition provide informational advantages to the acquirer. For a sample of U.S. domestic acquisitions, we use smartphone geolocational data to measure the movement of people between merging companies’ headquarters in the months before the acquisition announcement and use the number of visits between the two companies as a proxy for face-to-face interactions. Using bad weather conditions in the two companies’ locations as a source of exogenous variation in intercompany mobility, we find evidence that more intense face-to-face interactions increase the abnormal returns on the acquirer’s stock at the acquisition announcement. Keywords: Mergers and acquisitions; abnormal returns; information asymmetry; monitoring; face-to-face interaction We would like to thank Marvin Lieberman, Natarajan Balasubramanian, Tony Bernardo, Chirantan Chatterjee, Mark Garmaise, seminar participants at UCLA, and annual meetings at the Academy of Management and Strategic Management Society for helpful comments. We gratefully acknowledge the financial support of UCLA Anderson School of Management and the Academic Senate of the University of California, Los Angeles. We are grateful to SafeGraph Inc. for providing us with the smartphone geolocational data used for this study. a,b,cUniversity of California, Los Angeles, Anderson School of Management e-mail:
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