Informed Trading by Advisor Banks: Evidence from Options Holdings

• 成果类型: Article
• 署名作者: Lowry, Michelle; Rossi, Marco; Zhu, Zhongyan
• 署名单位: Drexel University; Texas A&M University System; Texas A&M University College Station; Monash University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhy072
• 发表日期: 2019
• 页码: 605
• 关键词: INFORMATIONAL CONTENT; corporate governance; prices; MARKET; volume; acquisition; INSIDERS; returns; boards; side

摘要

Strong conflicts of interest exist within investment banks: the investment banking division possesses substantial private information, and the asset management division seeks such information. This raises the question of whether the asset management division benefits from an information advantage on client firms. While prior examinations of advisor bank trading in client firms have focused on stocks and found mixed results, we argue that the options market represents a more attractive venue for such trading. We find significant evidence of advisor banks trading in client firm options ahead of merger announcements, but no evidence of similar trading in client firm stock.