Information content of directors' trading around acquisitions

Syed M.M. Shams, Huu Nhan Duong, Harminder Singh

Research output: Contribution to journalArticleResearchpeer-review

3 Citations (Scopus)


This paper investigates the patterns of directors' trades and returns around takeover announcements. We find that the pre-announcement net value (the difference between buy value and sell value) of directors' trading is positively related to acquirers' announcement period abnormal returns. This relation is stronger for private target acquisitions and for stock-financed acquisitions, when the information asymmetry between directors and outside investors is more pronounced. However, this relation does not hold for better governed and highly monitored acquirers. Our findings indicate opportunistic trading by directors prior to takeovers and highlight a significant role that corporate governance mechanism plays in restraining these opportunistic behaviors.

Original languageEnglish
Pages (from-to)177-193
Number of pages17
JournalPacific Basin Finance Journal
Publication statusPublished - 1 Jun 2016


  • Abnormal returns
  • Directors' trading
  • Information content

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