Information content of directors' trading around acquisitions

Shams, Syed M. M. and Duong, Huu Nhan and Singh, Harminder (2016) Information content of directors' trading around acquisitions. Pacific-Basin Finance Journal, 38. pp. 177-193. ISSN 0927-538X

Abstract

This paper investigates the patterns of directors' trades and returns around takeover announcements. We find that the pre-announcement net value (the difference between buy value and sell value) of directors' trading is positively related to acquirers' announcement period abnormal returns. This relation is stronger for private target acquisitions and for stock-financed acquisitions, when the information asymmetry between directors and outside investors is more
pronounced. However, this relation does not hold for better governed and highly monitored acquirers. Our findings indicate opportunistic trading by directors prior to takeovers and highlight a significant role that corporate governance mechanism plays in restraining these opportunistic behaviors.


Statistics for USQ ePrint 29324
Statistics for this ePrint Item
Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Files associated with this item cannot be displayed due to copyright restrictions.
Faculty / Department / School: Current - Faculty of Business, Education, Law and Arts - School of Commerce
Date Deposited: 05 Jul 2016 05:10
Last Modified: 05 Jul 2016 05:10
Uncontrolled Keywords: directors' trading; abnormal returns; information content
Fields of Research : 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150299 Banking, Finance and Investment not elsewhere classified
Socio-Economic Objective: C Society > 93 Education and Training > 9301 Learner and Learning > 930103 Learner Development
Identification Number or DOI: 10.1016/j.pacfin.2016.04.004
URI: http://eprints.usq.edu.au/id/eprint/29324

Actions (login required)

View Item Archive Repository Staff Only