End-of-Day Price Manipulation and M&As

British Journal of Management, Forthcoming

49 Pages Posted: 16 Oct 2018 Last revised: 22 Nov 2019

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University; European Corporate Governance Institute (ECGI)

Shan Ji

Capital Markets CRC

Sofia Johan

Florida Atlantic University - Finance; University of Vaasa; Tilburg Law and Economics Center (TILEC)

Monika Tarsalewska

University of Exeter Business School

Date Written: June 1, 2019

Abstract

Based on M&As from over 45 countries from 2003-2014, we show that the presence of end-of-day (EOD) target price manipulation prior to M&As increases the probability of an M&A deal withdrawal, and decreases the premium paid. More detailed exchange trading rules that govern manipulation across countries and over time lower the probability of withdrawal, mitigate the negative impact of EOD manipulation on withdrawal, and raise premiums paid. Finally, while there are fewer cases of acquirer price manipulations prior to M&As, the data indicates positive acquirer price manipulation in share M&As and increases the probability of deal withdrawal.

Keywords: Market Manipulation, M&As, Premiums, Regulation

JEL Classification: G14, G15, G18, G34, G38

Suggested Citation

Cumming, Douglas J. and Ji, Shan and Johan, Sofia A. and Tarsalewska, Monika, End-of-Day Price Manipulation and M&As (June 1, 2019). British Journal of Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3254874 or http://dx.doi.org/10.2139/ssrn.3254874

Douglas J. Cumming (Contact Author)

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://sites.google.com/view/douglascumming/bio?authuser=0

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://https://ecgi.global/users/douglas-cumming

Shan Ji

Capital Markets CRC ( email )

GPO Box 970
55 Harrington Street
Sydney, NSW 2001
Australia
+61280884237 (Phone)

Sofia A. Johan

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://sites.google.com/view/sofiajohan

University of Vaasa ( email )

P.O. Box 700
Wolffintie 34
FIN-65101 Vaasa, FI-65101
Finland

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Monika Tarsalewska

University of Exeter Business School ( email )

Streatham Court, Streatham Campus,
Rennes Drive
Exeter, Devon EX4 4PU
United Kingdom

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