Institutional Trades Around Takeover Announcements: Skill vs. Inside Information
40 Pages Posted: 11 Mar 2010 Last revised: 23 Apr 2011
There are 2 versions of this paper
Institutional Trades Around Takeover Announcements: Skill vs. Inside Information
Institutional Trades around Takeover Announcements: Skill Vs. Inside Information
Date Written: December 1, 2010
Abstract
This paper examines the pattern and profitability of institutional trades around takeover announcements. We find that the trades of funds as a group, either before or after takeover announcements, are not profitable. However, funds whose main broker is also a target advisor are net buyers of target shares before announcements and their pre-announcement trades are significantly profitable. Therefore, leakage of inside information from brokerages that advise the target is a significant source of funds’ informational advantage. We also find that a subset of funds is skilled at privately gathering information even when they do not trade through target advisors.
Keywords: Institutional Trades, Mergers and Acquisitions, Insider Information
JEL Classification: G14, G23
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
New Evidence and Perspectives on Mergers
By Gregor Andrade, Mark L. Mitchell, ...
-
Do Managerial Objectives Drive Bad Acquisitions?
By Randall Morck, Andrei Shleifer, ...
-
Stock Market Driven Acquisitions
By Andrei Shleifer and Robert W. Vishny
-
Stock Market Driven Acquisitions
By Andrei Shleifer and Robert W. Vishny
-
Poison or Placebo? Evidence on the Deterrent and Wealth Effects of Modern Antitakeover Measures
By Robert Comment and G. William Schwert
-
Does Corporate Performance Improve after Mergers?
By Paul M. Healy, Krishna Palepu, ...
-
Managerial Performance, Tobin's Q, and the Gains from Successful Tender Offers
By Larry H.p. Lang, Ralph A. Walkling, ...