M&A price pressure revisited

We find strong evidence using two covariance decomposition methodologies that arbitrage short selling plays the relatively most important role in explaining the pure equity price effects for acquirers for M&A announcements during the 2009–2015 period. We find that the abnormal net purchase ratio of managerial insiders (i.e., managerial informedness), CSR composite ranking (i.e., interest alignment with various firm stakeholders) and the inside debt ratio (i.e., managerial conservatism) are the most important determinants of the acquirer price effects at M&A announcements both independently and through their effect on arbitrage activities at M&A announcements.