66 Pages Posted: 15 Nov 2011 Last revised: 5 Mar 2017
Date Written: March 4, 2017
We use SEC-mandated disclosures to identify the dates when new private information about target or acquiring firm value is generated. Informed investors appear to immediately trade on new private information. The speed of their trading activity can be explained by the number of privately informed investors, institutional ownership, the expected profits from informed trading and associated risk of attracting the attention of enforcement agencies, and media speculation about an acquisition deal.
Keywords: Mergers, acquisitions, private information, insider trading, price formation, negotiations
JEL Classification: G12, G14, G18, G34, K22
Suggested Citation: Suggested Citation
Heitzman, Shane and Klasa, Sandy, Informed Trading Reactions to New Private Information: Evidence from Nonpublic Merger Negotiations (March 4, 2017). Available at SSRN: https://ssrn.com/abstract=1938436 or http://dx.doi.org/10.2139/ssrn.1938436