ANALYSTS’ ROLE IN M&A ANNOUNCEMENTS:\ud THE MODERATING EFFECT OF ANALYST SCRUTINY AT THE EVENT-LEVEL

Although much is known regarding the antecedents and consequences of analyst scrutiny, very little attention has been paid to how analyst scrutiny is stimulated in a firm’s announcement and subsequently influences the market response to the announcement. Adopting a behavioral perspective of analyst scrutiny in M&A context, I examine how analyst scrutiny moderates the effects of deal attributes on the market response to deal announcements. To test this moderating effect on M&A performance, I decompose analyst scrutiny into two levels: the firm-level and the event-level, and suggest that event-level scrutiny occurs based on specific event attributes. Treating deal-level scrutiny as event-level scrutiny triggered by a firm’s rich media use for an M&A announcement, I propose that deal-level scrutiny will magnify the effects of both value-positive and value-negative deal attributes on an acquirer’s market performance. A dataset of 783 M&A announcements by S&P 500 companies from 2005 to 2011 supported the moderating effect of rich media use only on the relationship between a negative deal attribute, such as relative deal size, and an acquirer’s performance, but not on the relationship between two positive attributes, cash payment for a deal and industry relatedness, and performance