Merger announcements and insider trading activity in India: an empirical investigation

Agarwal, Manish and Singh, Harminder 2006, Merger announcements and insider trading activity in India: an empirical investigation, Investment management & financial innovations, vol. 3, no. 3, pp. 140-154.

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Title Merger announcements and insider trading activity in India: an empirical investigation
Author(s) Agarwal, Manish
Singh, HarminderORCID iD for Singh, Harminder
Journal name Investment management & financial innovations
Volume number 3
Issue number 3
Start page 140
End page 154
Publisher Business Perspectives
Place of publication Sumy, Ukraine
Publication date 2006
ISSN 1810-4967
Keyword(s) merger
asymmetric and private information
Summary Insider trading activity is investigated prior to merger announcement in Indian capital market. An attempt is made to check it out whether trading takes place on the basis of asymmetric and private information. For examining the behaviour of stock prices a modified market model is used to estimate the parameters for the estimation window. These estimates are used to compute average return and cumulative average returns for the event window, which are measures of abnormal returns. Besides price run-ups, it is also common to see unusually high levels of share trading volume before public announcement of merger. Daily trading volume pattern of the target companies is also investigated. The analysis carried out in this study is based on a sample of 42 companies for which merger announcement date was announced during the period of 1996-1999. Based on the analysis for each company individually, we recommend investigation in six companies for existence of possible insider trading.
Language eng
Field of Research 150201 Finance
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2006, Business Perspectives
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Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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