This study investigates the effect of media coverage on the trading activity and stock liquidity of target firms’ shares around takeover announcements. We use the number of articles published in the four main UK broadsheet newspapers as a proxy for media coverage. Our dataset includes 350 UK domestic acquisition deals between 1996 and 2014. The results of our analysis suggest that media coverage is positively associated with trading activity and stock liquidity. This is consistent with the media playing a key role in mitigating information asymmetry in financial markets. This study contributes to the literature on stock market reaction to takeover announcements by investigating the effect of media coverage beyond the price run-up and by providing additional insights into the UK market, which traditionally attracts less attention than the US market.

Louise Gorman, Dublin Institute of Technology;  Theo Lynn, Irish Institute of Digital Business, Dublin City University;  Eleonora Monaco, Católica Porto Business School;  Riccardo Palumbo,  University of Chieti-Pescara;  Pierangelo Rosati, Irish Institute of Digital Business, Dublin City University