Management Optimism and Corporate Acquisitions: Evidence from Insider Trading

In this study we integrate evidence about managers' personal beliefs about their firms' prospects into an analysis of managerial decisions on acquisitions and takeover resistance. We examine insider trading (a proxy for personal beliefs) around significant corporate acquisitions and find l...

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Main Authors: BOEHMER, Ekkehart, Netter, Jeffry
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 1997
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Online Access:https://ink.library.smu.edu.sg/lkcsb_research/4681
https://doi.org/10.1002/(SICI)1099-1468(199711/12)18:7/8%3C693::AID-MDE864%3E3.0.CO;2-0
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spelling sg-smu-ink.lkcsb_research-56802016-03-05T14:45:03Z Management Optimism and Corporate Acquisitions: Evidence from Insider Trading BOEHMER, Ekkehart Netter, Jeffry In this study we integrate evidence about managers' personal beliefs about their firms' prospects into an analysis of managerial decisions on acquisitions and takeover resistance. We examine insider trading (a proxy for personal beliefs) around significant corporate acquisitions and find little cross-sectional differences in the trading patterns of all managers around an acquisition. In general, the insiders do not change their trading patterns in the period when their firm is making an important corporate acquisition. We still obtain this result after controlling for the announcement-day abnormal return. We also find that while managers of firms that do not become takeover targets themselves and of firms that are eventually targets of friendly bids earn positive abnormal returns in the period after their trade, this is not true for managers of firms that are later subject to a hostile bid. 1997-11-01T08:00:00Z text https://ink.library.smu.edu.sg/lkcsb_research/4681 info:doi/10.1002/(SICI)1099-1468(199711/12)18:7/8<693::AID-MDE864>3.0.CO;2-0 https://doi.org/10.1002/(SICI)1099-1468(199711/12)18:7/8%3C693::AID-MDE864%3E3.0.CO;2-0 Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University Business Corporate Finance Finance and Financial Management
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Business
Corporate Finance
Finance and Financial Management
spellingShingle Business
Corporate Finance
Finance and Financial Management
BOEHMER, Ekkehart
Netter, Jeffry
Management Optimism and Corporate Acquisitions: Evidence from Insider Trading
description In this study we integrate evidence about managers' personal beliefs about their firms' prospects into an analysis of managerial decisions on acquisitions and takeover resistance. We examine insider trading (a proxy for personal beliefs) around significant corporate acquisitions and find little cross-sectional differences in the trading patterns of all managers around an acquisition. In general, the insiders do not change their trading patterns in the period when their firm is making an important corporate acquisition. We still obtain this result after controlling for the announcement-day abnormal return. We also find that while managers of firms that do not become takeover targets themselves and of firms that are eventually targets of friendly bids earn positive abnormal returns in the period after their trade, this is not true for managers of firms that are later subject to a hostile bid.
format text
author BOEHMER, Ekkehart
Netter, Jeffry
author_facet BOEHMER, Ekkehart
Netter, Jeffry
author_sort BOEHMER, Ekkehart
title Management Optimism and Corporate Acquisitions: Evidence from Insider Trading
title_short Management Optimism and Corporate Acquisitions: Evidence from Insider Trading
title_full Management Optimism and Corporate Acquisitions: Evidence from Insider Trading
title_fullStr Management Optimism and Corporate Acquisitions: Evidence from Insider Trading
title_full_unstemmed Management Optimism and Corporate Acquisitions: Evidence from Insider Trading
title_sort management optimism and corporate acquisitions: evidence from insider trading
publisher Institutional Knowledge at Singapore Management University
publishDate 1997
url https://ink.library.smu.edu.sg/lkcsb_research/4681
https://doi.org/10.1002/(SICI)1099-1468(199711/12)18:7/8%3C693::AID-MDE864%3E3.0.CO;2-0
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