Informed Options Trading Prior to Takeover Announcements: Insider Trading?

Autor:	Patrick Augustin, Menachem Brenner, Marti G. Subrahmanyam
Rok vydání:	2019
Předmět:	050208 finance Strategy and Management 0502 economics and business 05 social sciences Mergers and acquisitions Equity (finance) Insider trading Business Monetary economics 050207 economics Management Science and Operations Research
Zdroj:	Management Science. 65:5697-5720
ISSN:	1526-5501 0025-1909
DOI:	10.1287/mnsc.2018.3122
Popis:	We quantify the pervasiveness of informed trading activity in target companies’ equity options before the announcements of 1,859 U.S. takeovers between 1996 and 2012. About 25% of all takeovers have positive abnormal volumes, which are greater for short-dated, out-of-the-money calls, consistent with bullish directional trading before the announcement. Over half of this abnormal activity is unlikely due to speculation, news and rumors, trading by corporate insiders, leakage in the stock market, deal predictability, or beneficial ownership filings by activist investors. We also examine the characteristics of option trades litigated by the Securities and Exchange Commission (SEC) for alleged illegal insider trading. Although the characteristics of such trades closely resemble the patterns of abnormal option volume in the U.S. takeover sample, we find that the SEC litigates only about 8% of all deals in it. This paper was accepted by Lauren Cohen, finance.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::73c83426e4d43e9faa31149c63f4581e https://doi.org/10.1287/mnsc.2018.3122 Zobrazit plný text záznamu Plný text ve formátu PDF