I only fear when I hear: how media affects insider trading in takeover targets

Aleksanyan, M. , Danbolt, J., Siganos, A. and Wu, B. (H.T.) (2022) I only fear when I hear: how media affects insider trading in takeover targets. Journal of Empirical Finance, 67, pp. 318-342. (doi: 10.1016/j.jempfin.2022.04.004)

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Abstract

We study how target firm insiders respond to Wall Street Journal articles referring to illegal insider trading in past mergers. Such articles lead to target insider share purchases before bid announcement to drop by 75%. This effect is stronger nearer the bid announcement and increases with article visibility. It remains significant after controlling for public enforcement intensity, but is weakened by the greater potential for profitable trading. Our results suggest insider trading articles temporarily heighten the perception of litigation and reputation risks. Overall, our study indicates that such articles have a meaningful short-term deterrence effect on opportunistic insider trading, and highlights the disciplinary role of the media.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Wu, Dr Betty and Siganos, Professor Antonios and Aleksanyan, Dr Mark
Creator Roles:
Aleksanyan, M.Conceptualization, Writing – original draft, Writing – review and editing, Validation
Siganos, A.Conceptualization, Methodology, Formal analysis, Writing – original draft, Writing – review and editing, Validation
Wu, B. (H.T.)Conceptualization, Methodology, Investigation, Data curation, Formal analysis, Writing – original draft, Writing – review and editing, Visualization, Validation
Authors: Aleksanyan, M., Danbolt, J., Siganos, A., and Wu, B. (H.T.)
College/School:College of Social Sciences > Adam Smith Business School
College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Journal of Empirical Finance
Publisher:Elsevier
ISSN:0927-5398
ISSN (Online):1879-1727
Published Online:20 April 2022
Copyright Holders:Copyright © 2022 The Authors
First Published:First published in Journal of Empirical Finance 67: 318-342
Publisher Policy:Reproduced under a Creative Commons License

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