Social media’s impact on the global M&A market

Abstract

I test the impact of social media popularity on the global M&A market using a sample of 66,905 M&A transactions spanning 27 years across 46 countries. As a shock to the information environment, I test whether social media has influenced M&A transactions through key deal variables that carry information content: namely, competing bids and proportion of cash paid in the transaction. As preliminary analyses I also test whether the number of bids increased following social media popularity. I find that social media popularity has increased the probability of competing bids by 7.7% across countries and the proportion of cash paid in transactions decreased by 2.5% across countries. However, statistical significance of these results disappear after inclusion of country fixed effects. The results of additional analyses using the introduction of the Internet is consistent with the conclusion that technologies that enhance the transmission of public information do not have an effect on the M&A variables tested. This study is distinct from existing literature due to its globally diverse M&A dataset, unique social media data, and country-level approach to social media’s influence on financial markets.