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Bidder country characteristics and informed trading in U.S. targets

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  • Madura, Jeff
  • Marciniak, Marek

Abstract

Information leakages experienced by U.S. targets in the pre-bid period are especially pronounced when they involve foreign bidders whose countries have weak insider trading sanctions, are perceived to have prevalent insider trading activity, have a low level of local merger activity, and are not classified as common law countries. Among foreign countries, information leakages are less pronounced when the bidder's government has a cooperative agreement with the SEC. Enforcement cooperation agreements signed between the SEC and foreign regulators serve as an effective means of enforcing the stricter U.S. insider trading laws on a more global scale.

Suggested Citation

  • Madura, Jeff & Marciniak, Marek, 2014. "Bidder country characteristics and informed trading in U.S. targets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 29(C), pages 256-284.
    • Handle: RePEc:eee:intfin:v:29:y:2014:i:c:p:256-284
    DOI: 10.1016/j.intfin.2013.12.009
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    More about this item

    Keywords

    Illegal insider trading; Cross-border acquisitions; Insider trading regulation; Insider trading sanctions; Informed trading;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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