Insider Trading Legislation and Acquisition Announcements: Do Laws Matter?

31 Pages Posted: 30 Jun 2006 Last revised: 4 Feb 2008

See all articles by Ernst G. Maug

Ernst G. Maug

University of Mannheim Business School; European Corporate Governance Institute (ECGI)

Jörn van Halteren

University of Mannheim - Department of Business Administration and Finance

Abraham Ackerman

affiliation not provided to SSRN

Date Written: February 1, 2008

Abstract

In this paper we investigate how the enactment and enforcement of insider trading restrictions affect the way in which information about acquisitions is released before the actual acquisition announcement. We analyze a sample with almost 19,000 acquisition announcements from 48 countries. We find that insider trading legislation strongly affects the information revealed to the market in the runup phase before the announcement whereas the impact of subsequent enforcement actions by regulators is much weaker and insignificant in some tests. We conclude that market participants rationally anticipate law enforcement.

Keywords: Insider Trading, Mergers and Acquisitions, Securities Law, Law and Finance

JEL Classification: G14, G34, K22, K42

Suggested Citation

Maug, Ernst G. and van Halteren, Jörn and Ackerman, Abraham, Insider Trading Legislation and Acquisition Announcements: Do Laws Matter? (February 1, 2008). EFA 2006 Zurich Meetings. Available at SSRN: https://ssrn.com/abstract=868708 or http://dx.doi.org/10.2139/ssrn.868708

Ernst G. Maug (Contact Author)

University of Mannheim Business School ( email )

L9, 1-2
Mannheim, 68131
Germany
+49 621 181-1952 (Phone)

HOME PAGE: http://cf.bwl.uni-mannheim.de/de/people/maug/

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Jörn Van Halteren

University of Mannheim - Department of Business Administration and Finance ( email )

D-68131 Mannheim
Germany

HOME PAGE: http://cf.bwl.uni-mannheim.de/van_halteren.html

Abraham Ackerman

affiliation not provided to SSRN ( email )

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