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Insider trading legislation and acquisition announcements : do laws matter?

Author

Listed:
  • Maug, Ernst
  • Halteren, Jörn van
  • Ackerman, Abraham

Abstract

In this paper we investigate how the enactment and enforcement of insider trading restrictions affect the way in which information about acquisitions is released before the actual acquisition announcement. We analyze a sample with almost 19,000 acquisition announcements from 48 countries. We find that insider trading legislation strongly affects the information revealed to the market in the runup phase before the announcement whereas the impact of subsequent enforcement actions by regulators is much weaker and mostly insignificant. The impact of insider trading legislation is stronger in countries with more effective judicial systems. We conclude that market participants rationally anticipate the degree of law enforcement.

Suggested Citation

  • Maug, Ernst & Halteren, Jörn van & Ackerman, Abraham, 2007. "Insider trading legislation and acquisition announcements : do laws matter?," Papers 07-34, Sonderforschungsbreich 504.
    • Handle: RePEc:mnh:spaper:2534
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    File URL: https://madoc.bib.uni-mannheim.de/2534/1/dp07_34.pdf
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    More about this item

    Keywords

    Insider Trading ; Mergers and Acquisitions ; Securities Law ; Law and Finance;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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