Public Data Accessibility and Mergers and Acquisitions

By adding staggered open-access data repositories as an exogenous shift in the flow of information, this paper investigates whether a substantial reduction in firms’ expenses for knowledge acquisition affects the governance of corporate transactions. We find that, after local public data platforms launch, firms become more active in initiating acquisitions, which can be attributed to improved managerial efficiency, stabilized investment expectations, and loosened financial constraints. This effect is concentrated in firms with greater opacity or without political connections. An expansion of the scope of public disclosure will encourage the acquiring company to pay in cash and reduce the acquisition premium, and provide important post-acquisition benefits. Our study sheds new light on the importance to firms of information-gathering costs in making better acquisition decisions and fostering more efficient capital allocation.