FT coverage and UK target price run-ups

Siganos, A. and Papa, M. (2015) FT coverage and UK target price run-ups. European Journal of Finance, 21(12), pp. 1070-1089. (doi:10.1080/1351847X.2014.924077)

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Abstract

We focus on the market expectation hypothesis to explain the increase in share prices and trading volume of target firms before their merger announcements that have conventionally been attributed to either insider trading or market expectation. We use Financial Times (FT) coverage as a proxy of merger expectation and search for relevant articles for 783 UK target firms between 1998 and 2010. We identify a total of 1049 rumour articles and find that the FT market expectation proxy explains a small percentage of the target price run-ups. Results are strong during the sample period, even though the magnitude for both returns and trading volume tends to decrease within recent years. There is also a strong contemporaneous relation between abnormal returns and trading volume. Unexplained increases in target prices and trading volume may be attributed to insider trading.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Siganos, Dr Antonios
Authors: Siganos, A., and Papa, M.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:European Journal of Finance
Publisher:Routledge
ISSN:1351-847X
ISSN (Online):1466-4364
Copyright Holders:
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<fragment>Copyright ©  2014 Taylor & Francis</fragment>
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First Published:First published in European Journal of Finance 21(12):1070-1089
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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