A rundown of merger target run-ups

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    Author
    Dutordoir, M; Vagenas-Nanos, E; Verwijmeren, P; Wu, B
    Date
    2021
    Source Title
    Financial Management
    Publisher
    Wiley
    University of Melbourne Author/s
    Verwijmeren, Patrick
    Affiliation
    Finance
    Metadata
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    Document Type
    Journal Article
    Citations
    Dutordoir, M., Vagenas-Nanos, E., Verwijmeren, P. & Wu, B. (2021). A rundown of merger target run-ups. Financial Management, 50 (2), pp.487-518. https://doi.org/10.1111/fima.12331.
    Access Status
    Open Access
    URI
    http://hdl.handle.net/11343/252556
    DOI
    10.1111/fima.12331
    Abstract
    We provide evidence of a drastic drop in stock run-ups of U.S. target firms preceding merger and acquisition (M&A) announcements over the past decades. The median target run-up declines from approximately 10% in the 1980s to 2% after 2010. The trend in target run-ups cannot be fully explained by deal or firm characteristics associated with deal anticipation. However, it disappears after controlling for changes in the strength of U.S. insider trading regulation over the research period. Further analyses corroborate our conclusion that more stringent insider trading regulation is the most likely explanation for the reduction in target run-ups.

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