TY - JOUR
T1 - A rundown of merger target run-ups
AU - Dutordoir, Marie
AU - Verwijmeren, Patrick
AU - Vagenas-Nanos, Evangelos
AU - Wu, Betty
PY - 2020/8/6
Y1 - 2020/8/6
N2 - We provide evidence of a drastic drop in stock run‐ups of U.S. target firms preceding merger and acquisition (M&A) announcements over the past decades. The median target run‐up declines from approximately 10% in the 1980s to 2% after 2010. The trend in target run‐ups cannot be fully explained by deal or firm characteristics associated with deal anticipation. However, it disappears after controlling for changes in the strength of U.S. insider trading regulation over the research period. Further analyses corroborate our conclusion that more stringent insider trading regulation is the most likely explanation for the reduction in target run‐ups.
AB - We provide evidence of a drastic drop in stock run‐ups of U.S. target firms preceding merger and acquisition (M&A) announcements over the past decades. The median target run‐up declines from approximately 10% in the 1980s to 2% after 2010. The trend in target run‐ups cannot be fully explained by deal or firm characteristics associated with deal anticipation. However, it disappears after controlling for changes in the strength of U.S. insider trading regulation over the research period. Further analyses corroborate our conclusion that more stringent insider trading regulation is the most likely explanation for the reduction in target run‐ups.
UR - http://www.scopus.com/inward/record.url?scp=85090306340&partnerID=8YFLogxK
U2 - 10.1111/fima.12331
DO - 10.1111/fima.12331
M3 - Article
SN - 0046-3892
SP - 1
EP - 32
JO - Financial Management
JF - Financial Management
ER -