Universal Journal of Accounting and Finance Vol. 6(4), pp. 144 - 155
DOI: 10.13189/ujaf.2019.060403
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Insider Trading and Institutional Holdings in Mergers and Acquisitions


Ching-Chih Wu *, Bing-Huei Lin , Tung-Hsiao Yang
Department of Finance, National Chung Hsing University, Taiwan

ABSTRACT

We investigate three issues about the impact of insider trades and institutional holdings on mergers and acquisitions (M&As). First, we test how insider trades affect the trading behavior of institutional investors in M&As. Second, we test whose trading behavior, either insiders or institutional investors, has greater explanatory power for the performance of M&A firms after takeover announcements. Third, we analyze the industry-wide spillover effects of insider trades and institutional holdings. Empirically, we find that insiders and institutional investors of M&A firms may utilize similar information in their transactions because insider trades induce similar trading behavior for institutional investors. In addition, insider trades, relative to institutional holdings, have greater explanatory power for M&A firm's long-term performance. Finally, compared with insider trades, institutional holdings have a more significant spillover effect in the industry of M&A firms.

KEYWORDS
Insider Trade, Institutional Holding, Spillover Effect, Contagion Effect

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Ching-Chih Wu , Bing-Huei Lin , Tung-Hsiao Yang , "Insider Trading and Institutional Holdings in Mergers and Acquisitions," Universal Journal of Accounting and Finance, Vol. 6, No. 4, pp. 144 - 155, 2018. DOI: 10.13189/ujaf.2019.060403.

(b). APA Format:
Ching-Chih Wu , Bing-Huei Lin , Tung-Hsiao Yang (2018). Insider Trading and Institutional Holdings in Mergers and Acquisitions. Universal Journal of Accounting and Finance, 6(4), 144 - 155. DOI: 10.13189/ujaf.2019.060403.