Do business ties generate private information? Evidence from institutional trading around M&A announcements

David J. Pedersen

doi:10.1016/j.frl.2020.101462

Do business ties generate private information? Evidence from institutional trading around M&A announcements

David J. Pedersen

Camden School of Business

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

1 Scopus citations

Abstract

Business ties generate private information for institutional investors related to a firm's 401(k) trustee. These investors strategically trade a bidder's stock around the announcement of a deal, reducing holdings ahead of value-destroying deals and increasing their positions before value-creating ones. Superior trading ability does not explain this behavior as these same investors do not exhibit similar trading behavior in firms with which they do not have a business tie.

Original language	English (US)
Article number	101462
Journal	Finance Research Letters
Volume	38
DOIs	https://doi.org/10.1016/j.frl.2020.101462
State	Published - Jan 2021

All Science Journal Classification (ASJC) codes

Finance

Keywords

401(k)
Business ties
Employee pension plans
Mergers and acquisitions
Trustee

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10.1016/j.frl.2020.101462

Cite this

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abstract = "Business ties generate private information for institutional investors related to a firm's 401(k) trustee. These investors strategically trade a bidder's stock around the announcement of a deal, reducing holdings ahead of value-destroying deals and increasing their positions before value-creating ones. Superior trading ability does not explain this behavior as these same investors do not exhibit similar trading behavior in firms with which they do not have a business tie.",

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KW - Trustee

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Do business ties generate private information? Evidence from institutional trading around M&A announcements

Abstract

All Science Journal Classification (ASJC) codes

Keywords

Access to Document

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