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Target Firm Abnormal Returns and Trading Volume around the Initiation of Change in Control Transactions

Published online by Cambridge University Press:  06 April 2009

Ralph W. Sanders Jr  and
John S. Zdanowicz
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Abstract

This study examines the average abnormal returns, average abnormal trading volume, and reported insider trading of corporate control target firms during a period of possibly informed trading. This period begins on the unpublicized initiation date (as reported in a postannouncement date proxy statement or 14-D1) and ends on the publication date of the first Wall Street Journal story signalling an impending change in corporate control. We find that the preannouncement date average abnormal return noted by other researchers begins after the unpublicized initiation date of the transaction. We find no evidence of the preannouncement date average abnormal trading volume noted by previous researchers; instead, we find average abnormal volume beginning with the first public information regarding the transaction.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 27 , Issue 1 , March 1992 , pp. 109 - 129
Copyright
Copyright © School of Business Administration, University of Washington 1992

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