Price run-ups and insider trading laws under different regulatory environments

Styliani (Elina) Panetsidou; Angelos Synapis; Ioannis Tsalavoutas

doi:10.1007/s11156-022-01052-0

Price run-ups and insider trading laws under different regulatory environments

Styliani (Elina) Panetsidou, Angelos Synapis, Ioannis Tsalavoutas

University of Glasgow

Research output: Contribution to journal › Article › peer-review

3 Citations (Scopus)

86 Downloads (Pure)

Abstract

We examine target firms’ price run-ups prior to takeovers in two different exchange regulatory environments within the same country. We show that target firms listed both in the secondary market of the UK, known as the Alternative Investment Market (AIM), and in the traditionally regulated Main Market, experience significant abnormal stock returns prior to takeover announcements. These results persist after controlling for market anticipation, indicating signs of information leakage. Contrary to the narrative that secondary markets may be more susceptible to market abusive behaviors, we find that the AIM targets experience significantly lower pre-announcement returns. In addition, we do not find support that the introduction of stricter laws reduces the price run-ups in any of the two markets. In sharp contrast, we find support that the enforcement of insider trading laws, through criminal convictions, reduces the pre-announcement abnormal stock returns but only in the market in which the enforcement focuses.

Original language	English
Pages (from-to)	601-639
Number of pages	39
Journal	Review of Quantitative Finance and Accounting
Volume	59
Issue number	2
Early online date	15 Apr 2022
DOIs	https://doi.org/10.1007/s11156-022-01052-0
Publication status	Published - Aug 2022

Bibliographical note

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

This document is the author’s post-print version, incorporating any revisions agreed during the peer-review process. Some differences between the published version and this version may remain and you are advised to consult the published version if you wish to cite from it.

Keywords

Price run-ups
Takeovers
Insider trading laws
Alternative investment market (AIM)
Main market (MM)

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1007/s11156-022-01052-0

Post-PrintAccepted author manuscript, 1.31 MB

Cite this

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Price run-ups and insider trading laws under different regulatory environments

Abstract

Bibliographical note

Keywords

UN SDGs

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