Journal article

Hedge funds in M&A deals: Is there exploitation of insider information?

R Dai, N Massoud, DK Nandy, A Saunders

Journal of Corporate Finance | Published : 2017

Abstract

This paper investigates trading patterns in target and acquirer firms prior to public announcement of M&A deals, a corporate event in which group based co-offence has been anecdotally documented. Our analysis differentiates whether such trading is primarily conducted by hedge funds with short-term investment horizons as opposed to other short horizon investors or hedge funds and institutional investors with long-term horizons, in both the equity and derivatives markets. Our results are consistent with exploitation of M&A deal related information prior to the deal's public announcement. In particular we find that the greater the likelihood of insider information leakage, the greater the short..

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University of Melbourne Researchers