The homophily perspective suggests that firms with similar attributes are drawn to one another. Prior research predominantly centers on inherent homophily, which pertains to firms’ homophily regarding their intrinsic characteristics or strategies. Nevertheless, there is a restricted comprehension of how perceived homophily, as portrayed by journalists, biases firms’ perceptions and influences their decisions. We theorize that following firms’ public announcement of their acquisition agreements, journalists may convey the involved firms with semantic fitness that aligns with affective, cognitive, social, and perceptive rhetoric. This semantic fit, in turn, enhances the likelihood of acquisition completion, as firms engaged in due diligence during this phase perceive a sense of homophily based on the journalists’ reports. Furthermore, strategic homophily, manifested by merging firms’ connections, can substitute the effect of perceived homophily on acquisition completion. We offer empirical evidence from announced acquisitions by U.S. firms to support our theory. This study contributes by introducing perceived homophily as a new mechanism impacting acquisition completion and by elucidating the relationship between the merging firms’ perceived homophily and strategic homophily.
