How Negative Media Sentiment Regarding Social Stability Influences Hostile and Friendly Takeover Outcomes

We explore how negative media sentiment regarding social stability distinctly influences the non-financial performance outcomes of friendly and hostile takeovers. In so doing, we shift the attention of media sentiment research from a focal firm, action, or actor toward the country where the target firm is embedded. We thus propose a framework of how country-level negative media sentiment impacts firm-level takeover outcomes. In the framework, we suggest that negative media sentiment makes the attributes of a friendly takeover, where cooperation and collegiality are present, congruent with the target country desire for social stability, thereby creating legitimacy. On the other hand, the traits of a hostile takeover, where discord and animosity characterize the transaction, are incongruent with the target country, making the fear of legitimacy loss salient for the acquiring firm. These factors enable or impair the likelihood of takeover completion and the time it takes to finalize the takeover. Additionally, we find that the features of a free press, where press freedom exists in a target country, amplify the effect of negative media sentiment on takeover outcomes, where the trustworthiness of the sentiment enhances the congruence or incongruence with the type of takeover in a target country. We make contributions to the literature on media sentiment.