An analysis of trading in target stocks before successful takeover announcements

Clements, Marcus and Singh, Harminder 2011, An analysis of trading in target stocks before successful takeover announcements, Journal of multinational financial managment, vol. 21, no. 1, pp. 1-17, doi: 10.1016/j.mulfin.2010.12.002.

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Title An analysis of trading in target stocks before successful takeover announcements
Author(s) Clements, Marcus
Singh, HarminderORCID iD for Singh, Harminder
Journal name Journal of multinational financial managment
Volume number 21
Issue number 1
Start page 1
End page 17
Total pages 17
Publisher Elsevier B. V.
Place of publication Amsterdam, The Netherlands
Publication date 2011-02
ISSN 1042-444X
Keyword(s) informed trading
contraire trading
market efficiency
event study
Summary In this paper we examine both informed and contraire trading preceding successful takeover announcements on US target firms from 2001 to 2006. We find that both informed trading and contraire trading exist within the period preceding successful takeover announcements on the stock market, as evident through abnormal returns and trading volumes and on the option market by analyzing only abnormal trading volume. In regard to contraire trading, we investigate possible explanations for its existence. This study finds, through analysis of an unbiased sample of rumored target firms, that deliberate contraire trading appears to be profitable which is likely an explanation for such trading.
Language eng
DOI 10.1016/j.mulfin.2010.12.002
Field of Research 150201 Finance
Socio Economic Objective 900102 Investment Services (excl. Superannuation)
HERDC Research category C1 Refereed article in a scholarly journal
HERDC collection year 2011
Copyright notice ©2011, Elsevier
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Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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