Investor Conferences and Institutional Trading in Takeover Targets
50 Pages Posted: 28 Dec 2011 Last revised: 30 Sep 2014
Date Written: September 19, 2014
I examine whether access to the management of takeover targets at investor conferences is associated with informed trading before these firms’ takeover announcements. I find that during the one year preceding takeover announcements, institutional investors are significant net buyers in targets that have presented at conferences and marginal net sellers in other targets. Institutions increase their ownership more when targets present at more conferences, larger conferences, and conferences hosted by more experienced brokers. Consistent with conferences catering to the informational needs of primarily large investors, targets’ conference presentations benefit large investors and have no impact on small investors’ pre-takeover trades. Direct examination of institutional investors’ order imbalances around conference presentation days suggests that they buy significantly more stock of future targets compared to firms that present at conferences but receive no post-conference acquisition bids. Collectively, the results are consistent with institutional investors being able to identify future takeover targets through their interactions with the executives of these firms at investor conferences.
Keywords: Investor conferences, institutional investors, informed trading, takeover targets, mergers and acquisitions
JEL Classification: G14, G34
Suggested Citation: Suggested Citation