Market Manifestation Of Nonpublic Information Prior To Mer

Research was undertaken to examine the ability of publicly available information to explain target firms' price "run-ups" prior to tender and merger announcements. Critics charge that run-ups before acquisition announcements indicate that the disclosure system fails to provide equal a...

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Bibliographic Details
Published inThe Accounting review Vol. 65; no. 2; p. 432
Main Authors Haw, In-Mu, Pastena, Victor S, Lilien, Steven B
Format Journal Article
LanguageEnglish
Published Sarasota American Accounting Association 01.04.1990
Subjects
Acquisitions & mergers
Confidentiality
Disclosure
Increases
Mathematical models
SEC regulations
Statistical analysis
Stock prices
Studies
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Summary:Research was undertaken to examine the ability of publicly available information to explain target firms' price "run-ups" prior to tender and merger announcements. Critics charge that run-ups before acquisition announcements indicate that the disclosure system fails to provide equal access to information for all market participants. To determine whether market run-ups reflected nonpublic information, such as disclosures of the purchase of small blocks of stock and public rumors, the research concentrated on periods prior to the earliest acquisition-related disclosure. An event-type methodology was used. Results show that substantial market activity occurred prior to what could be identified as the first public disclosure of any information about potential acquisition. In a related matter, it is shown that market price run-ups occurred earlier for owner-controlled firms for both mergers and tender offers, suggesting that information leakage varies with ownership control structure.
ISSN:0001-4826
1558-7967