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Target insiders' preferences when trading before takeover announcements : deal completion probability, premium and deal characteristics
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Fidrmuc, Jana P. and Xia, Chunling (2022) Target insiders' preferences when trading before takeover announcements : deal completion probability, premium and deal characteristics. European Financial Management, 28 (1). pp. 162-207. doi:10.1111/eufm.12308 ISSN 1354-7798.
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WRAP-Target-insiders-preferences-trading-before-takeover-announcement-2021.pdf - Accepted Version - Requires a PDF viewer. Download (1104Kb) | Preview |
Official URL: https://doi.org/10.1111/eufm.12308
Abstract
We contribute to the M&A literature by characterizing the information available to target insiders during the pre‐public takeover negotiations. We analyze insider trading in target firms in the US between 2005 and 2018. First, we show that signing confidentiality agreements is an important information threshold. Second, insiders have a good grasp of deal success. They increase their net purchases only in deals with higher completion probability. Third, insiders guess the final offer price well, but their trading strategies additionally reflect their knowledge of deal characteristics. They prefer bidder‐initiated, cash, privately negotiated, and strategic deals. Insiders combine several sources of information.
| Item Type: | Journal Article | ||||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce H Social Sciences > HG Finance |
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| Divisions: | Faculty of Social Sciences > Warwick Business School | ||||||||
| SWORD Depositor: | Library Publications Router | ||||||||
| Library of Congress Subject Headings (LCSH): | Consolidation and merger of corporations, Insider trading in securities , Target marketing | ||||||||
| Journal or Publication Title: | European Financial Management | ||||||||
| Publisher: | Wiley-Blackwell Publishing Ltd. | ||||||||
| ISSN: | 1354-7798 | ||||||||
| Official Date: | January 2022 | ||||||||
| Dates: |
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| Volume: | 28 | ||||||||
| Number: | 1 | ||||||||
| Page Range: | pp. 162-207 | ||||||||
| DOI: | 10.1111/eufm.12308 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Reuse Statement (publisher, data, author rights): | "This is the peer reviewed version of the following article: Fidrmuc, J.P. and Xia, C. (2021), Target insiders' preferences when trading before takeover announcements : deal completion probability, premium and deal characteristics. Eur Financ Manag. Accepted Author Manuscript. which has been published in final form at https://doi.org/10.1111/eufm.12308. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions." | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
| Date of first compliant deposit: | 13 April 2021 | ||||||||
| Date of first compliant Open Access: | 24 March 2023 | ||||||||
| Related URLs: |
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