Unusual trading activity prior to merger and acquisition announcements – evidence from the United States
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School of Business |
Bachelor's thesis
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Authors
Date
2016
Department
Major/Subject
Mcode
Degree programme
Rahoitus
Language
en
Pages
25
Series
Abstract
This paper investigates how unusual trading volume of stocks precede favourable/unfavourable merger or acquisition announcements. I find that the cumulative abnormal returns after the announcement are on average lower on stocks that experience unusually low or high trading volume prior to the announcement day than on normal volume stocks. My findings contradict slightly with the previous literature, which supports the idea that unusually high trading volume signals more positive future returns. The data consists of the United States stocks from 2002 to 2015. The focus is on the target stocks – i.e. the company being acquired or merged into the buying company.Description
Thesis advisor
Lof, MatthijsKeywords
mergers and acquisitions, trading volume, unusual trading volume, corporate finance