Disclosures Strategy of Family Succession CEOs Prior to Stock-financed M&As
This study extends the extant literature on family socioemotional wealth to complement the research regarding family businesses and M&As by discussing why the family succession CEOs manage disclosures through the release of good news before stock-financed M&As. Meanwhile, we incorporate family involvement in top management teams and ownership, as well as a firm’s performance aspiration gap, to further illustrate why the intentions of disclosure management are heterogeneous among family successors.
The results show that a family succession CEO is more likely to release good news prior to stock-financed M&As. We also found that family involvement and a firm’s performance below the aspiration level enhance the family successors’ intention regarding disclosure management. Moreover, family successors who release good news generate better post-M&A performance, implying that the intention of family succession CEOs to manage disclosures is more likely to reduce information asymmetry rather than solely pursue self-interest.