Despite accounting literature demonstrates that country- and firm-related factors drive disclosure in financial statements, whether transaction-specific features also affect the extent of disclosure is still unclear. In this paper, we examine such issue by investigating the association between the disclosure offered on M&A and multiple determinants incidental to the M&A itself. Referring to the unique Italian setting, showing high discretion and potential sensitivity toward disclosure, we document that acquirers increase disclosure for larger M&A and reduce disclosure for increasing M&A materiality and extreme amounts of goodwill recognized on the transaction. By disentangling mandatory and voluntary disclosure, empirical evidence shows that the latter is sensitive to more M&A-specific features than the former. Additional analyses and robustness tests support our main findings. The study contributes to accounting literature by highlighting the importance to include transaction-specific features when modelling for transaction-related disclosure, and has practical implications for investors, standard-setters, and regulators.
- Business combination
- Disclosure Quality