Does target firm insider trading signal the target's synergy potential in mergers and acquisitions?

• 成果类型: Article
• 署名作者: Suk, Inho; Wang, Mengmeng
• 署名单位: State University of New York (SUNY) System; University at Buffalo, SUNY; Korea University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2021.05.038
• 发表日期: 2021
• 页码: 1155-1185
• 关键词: INSIDER TRADES; Mergers and Acquisitions; regulation; information asymmetry; signaling

摘要

We find that the acquirer's (1) abnormal returns at merger and acquisition (M&A) an-nouncements and (2) long-term abnormal returns after acquisitions increase with tar -get firm insiders' net purchase ratios. Further, acquisition synergies, measured as the (1) acquirer-target combined cumulative abnormal returns at M&A announcements and (2) changes in three-year operating performance after acquisitions, increase with target in-sider net purchase ratios. Notwithstanding, targets with higher insider net purchase ratios receive higher takeover premiums. Overall, our findings suggest that, even under the SEC's short-swing rule, target insider trading prior to the M&A announcement serves as a cred-ible signal for acquisition outcomes. (c) 2021 Published by Elsevier B.V.