Abstract

http://ssrn.com/abstract=1568859
 
 

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Institutional Trades Around Takeover Announcements: Skill vs. Inside Information


Narasimhan Jegadeesh


Emory University - Department of Finance

Yue Tang


University of Florida - Department of Finance, Insurance and Real Estate

December 1, 2010

AFA 2011 Denver Meetings Paper

Abstract:     
This paper examines the pattern and profitability of institutional trades around takeover announcements. We find that the trades of funds as a group, either before or after takeover announcements, are not profitable. However, funds whose main broker is also a target advisor are net buyers of target shares before announcements and their pre-announcement trades are significantly profitable. Therefore, leakage of inside information from brokerages that advise the target is a significant source of funds’ informational advantage. We also find that a subset of funds is skilled at privately gathering information even when they do not trade through target advisors.

Number of Pages in PDF File: 40

Keywords: Institutional Trades, Mergers and Acquisitions, Insider Information

JEL Classification: G14, G23

working papers series


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Date posted: March 11, 2010 ; Last revised: April 23, 2011

Suggested Citation

Jegadeesh, Narasimhan and Tang, Yue, Institutional Trades Around Takeover Announcements: Skill vs. Inside Information (December 1, 2010). AFA 2011 Denver Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1568859 or http://dx.doi.org/10.2139/ssrn.1568859

Contact Information

Narasimhan Jegadeesh (Contact Author)
Emory University - Department of Finance ( email )
Atlanta, GA 30322-2710
United States
Yue Tang
University of Florida - Department of Finance, Insurance and Real Estate ( email )
P.O. Box 117168
Gainesville, FL 32611
United States
352-273-4447 (Phone)
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