Competitor risk disclosure and firm M&A activities: evidence from textual analysis

This paper investigates the impact of competitor risk disclosure on M&A activities of Chinese firms. By analysing 32,364 firm-year observations over 2007–2021, we find that competitor risk disclosure reduces the likelihood, frequency, and size of corporate M&A activities. Our findings withstand a series of endogeneity and robustness tests. Additionally, the increase of debt financing costs is the path through which competitor risk disclosure affects firms' M&A activities. Further analyses show that financing constraints and non-state ownership amplify the impact of competitor risk disclosure on firms' M&A activities. These findings enrich the literature on the economic consequences of competitor qualitative disclosure.