Information content of directors' trading around acquisitions

Shams, Syed M. M., Duong, Huu Nhan and Singh, Harminder 2016, Information content of directors' trading around acquisitions, Pacific-Basin finance journal, vol. 38, pp. 177-193, doi: 10.1016/j.pacfin.2016.04.004.

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Title Information content of directors' trading around acquisitions
Author(s) Shams, Syed M. M.
Duong, Huu Nhan
Singh, HarminderORCID iD for Singh, Harminder
Journal name Pacific-Basin finance journal
Volume number 38
Start page 177
End page 193
Total pages 17
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2016-06
Keyword(s) Directors' trading
Abnormal returns
Information content
Summary 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.
Language eng
DOI 10.1016/j.pacfin.2016.04.004
Field of Research 1501 Accounting, Auditing and Accountability
1502 Banking, Finance and Investment
150201 Finance
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2016, Elsevier
Free to Read? No
Free to Read Start Date 2018-07-01
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Document type: Journal Article
Collection: Department of Finance
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