Does media affect the rival response to acquisition targets?

Employing a sample of 6,084 acquisitions from 2001 to 2017, we show that higher media coverage of rival firms (i.e., in the same industry as the target) increases their likelihood of being subsequently targeted and the announcement CARs. We conduct various tests to alleviate the endogeneity concern. Our results are robust when controlling for analyst coverage and the media coverage of acquirer and target firms. We further show that rivals with greater media attention have higher premiums when they receive future acquisition bids. Lastly, we find that the effect of media coverage on the rival response is more pronounced for rivals with a higher similarity score to the target, initial industry acquisitions, and acquisitions occur early in an industry merger wave. Our study highlights the media's vital role in shaping the rival response to acquisition targets.