Insider trading legislation and acquisition announcements: do laws matter?

Ernst Maug, Jörn van Halteren and Abraham Ackerman

No 07-34, Papers from Sonderforschungsbreich 504

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.

Keywords: Insider Trading; Mergers and Acquisitions; Securities Law; Law and Finance (search for similar items in EconPapers)
JEL-codes: G14 G34 K22 K42 (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:mnh:spaper:2534

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