Title: The Dark Side of Corporate Information Search: Evidence from Signals of Adverse Selection by Takeover Target Firms
Speaker：SHAN Yaowen, Professor at the University of Technology Sydney
Time：15:00 p.m., October 24,2025
Venue：Room109, Building No.12, Wushan Campus
Introduction to the Speaker
SHAN Yaowen, a professor in the Department of Accounting at the University of Technology Sydney, currently serves as the Co-Chair of the Accounting and Finance Association of Australia and New Zealand (AFAANZ). His research areas include capital market studies, corporate governance, accounting choices and disclosures, and executive compensation. Professor SHAN has published over 50 papers in leading international journals, including The Accounting Review, Review of Accounting Studies, Contemporary Accounting Research, Journal of Corporate Finance, Journal of Banking and Finance, Abacus, Accounting and Finance, and Australian Journal of Management. He currently holds the position of Co-Editor for Australian Accounting Review and Accounting Research Journal, and serves as an Associate Editor for Accounting and Finance, Australian Journal of Management, and Journal of International Accounting, Auditing and Taxation.
Abstract
Existing studies document diverse benefits of information search, but company information search can also signal adverse selection. Analyzing takeover targets’ digital footprints in the pre-announcement period, we find that target information search is negatively associated with cumulative abnormal returns around takeover announcements. This effect holds for information searches involving both financial and non-financial filings, and is robust to extensive tests and two identification strategies addressing endogeneity. Information-searching targets receive lower takeover premiums, reinforcing the link between information search behavior and reduced shareholder value. By contrast, acquirers of these targets experience higher announcement returns, hire fewer financial advisors, and obtain more favorable termination terms. The negative effect of information search is stronger among targets with higher bankruptcy risk and greater CEO ownership, but is mitigated by target-acquirer social ties. Overall, our findings reveal that targets’ information search behavior conveys adverse selection signals that shape shareholder wealth and takeover outcomes.
