The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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Merger Announcements and Insider Trading Activity: An Empirical Investigation
Published: 09/01/1981 | DOI: 10.1111/j.1540-6261.1981.tb04888.x
ARTHUR J. KEOWN, JOHN M. PINKERTON
This paper provides evidence of excess returns earned by investors in acquired firms prior to the first public announcement of planned mergers. The study is distinguished from earlier merger studies in its use of daily holding period returns for the 194 firms sampled. The results confirm statistically what most traders already know. Impending merger announcements are poorly held secrets, and trading on this nonpublic information abounds. Specifically, leakage of inside information is a pervasive problem occurring at a significant level up to 12 trading days prior to the first public announcement of a proposed merger.
Bankruptcy and Insider Trading: Differences Between Exchange‐Listed and OTC Firms
Published: 03/01/1992 | DOI: 10.1111/j.1540-6261.1992.tb03989.x
THOMAS GOSNELL, ARTHUR J. KEOWN, JOHN M. PINKERTON
Over the two‐year period prior to the bankruptcy announcement, insider trading is significantly greater for OTC bankrupt firms, but not for exchange‐listed firms, than for an industry‐size matched sample of nonbankrupt firms. In addition, the level of insider selling increases over the final five months leading to the first public announcement of OTC firms. Finally, firms displaying the most negative price reaction over the announcement period are found to have a significantly larger proportion of insider selling than other firms.