An Empirical Analysis of Merger-Related Blog Posts

Financial blogs are maintained by individuals (investors) in order to share information and opinions about financial topics and events, such as merger attempts. A merger attempt represents a situation of uncertainty for investors, because a lot of merger attempts are unsuccessful. Using a computer-assisted approach for content analysis of textual data, this study aims to explore if blog posts reflect the uncertainty concerning the final result of a merger attempt during the time period between the public announcement of a merger and the date of completion/withdrawal of a merger attempt. The results provide evidence that blog posts that are related to a failed merger attempt reflect more uncertainty, show less optimism, and reflect more signs of failure compared to successful merger attempts. This shows that information exchange in social media can serve as an indicator for other financial phenomena besides capital market reactions.