Can firms offset information asymmetry shocks? Evidence from local newspaper closures

This study examines whether firms can offset external information asymmetry shocks in mergers and acquisitions (M&A). Using U.S. domestic M&A deals from 2005 to 2018, we find that local newspaper closures reduce M&A deal value. However, acquirers achieve higher returns when targets have stronger accounting quality and more conservative reporting, particularly when acquirers and targets are located in different states. These findings suggest that firms can mitigate exogenous information asymmetry shocks by relying on high-quality accounting information, enabling more efficient investment decisions.