Does Voluntary Financial Disclosure Matter? The Case of Fairness Opinions in Mergers and Acquisitions

We use the shifting nature of Delaware's disclosure requirements for fairness opinions in tender offers to assess the impact of voluntary versus mandatory disclosure. To do so, we obtain the disclosures of details in fairness opinions by the targets of over 900 tender offers from 1995 to 2019. Over this period, the disclosure regime for tender offers transitioned from a voluntary one to a mandatory one. We document that the disclosure rates of details in fairness opinions are low under voluntary rules and rise steadily as Delaware courts became increasingly insistent on the disclosure of these details. We also show that proshareholder changes to tender offers are associated with disclosure of tender offer details only under the voluntary regime. These results highlight the complexity of predicting the effects of disclosure rules and provide empirical support for theoretical work that argues that mandatory-disclosure regimes can narrow opportunities to signal.