Open AccessIs insider trading regulation effective? Evidence from UK takeover activity
Author(s) -
Brendan John Lambe
Publication year - 2012
Publication title -
journal of governance and regulation
Language(s) - English
Resource type - Journals
eISSN - 2306-6784
pISSN - 2220-9352
DOI - 10.22495/jgr_v1_i2_p2
Subject(s) - insider trading , insider , stock (firearms) , business , stock price , public information , monetary economics , event study , accounting , financial economics , economics , finance , law , political science , mechanical engineering , paleontology , context (archaeology) , public administration , series (stratigraphy) , biology , engineering
Analysed in this study are the returns on stock prices of target companies surrounding the first publicised dates of completed takeovers in the UK between 2001 and 2010. Two samples are created of 209 and 197 firms for announcement and rumoured dates respectively. Both demonstrate statistically significant cumulative abnormal returns (CARs) prior to the release of information about the impending bid. This paper investigates whether observable factors create this price run-up or if it is the result of disclosed insider trading. Cross sectional analysis of CARs do not corroborate the claim that reported informed trades are the cause of this effect, this may indicate that trading on material non public information goes undisclosed.