@article{38369c2aee844720afc72895cdb6177c,
title = "I only fear when I hear: How media affects insider trading in takeover targets",
abstract = "We study how target firm insiders respond to Wall Street Journal articles referring to illegal insider trading in past mergers. Such articles lead to target insider share purchases before bid announcement to drop by 75\%. This effect is stronger nearer the bid announcement and increases with article visibility. It remains significant after controlling for public enforcement intensity, but is weakened by the greater potential for profitable trading. Our results suggest insider trading articles temporarily heighten the perception of litigation and reputation risks. Overall, our study indicates that such articles have a meaningful short-term deterrence effect on opportunistic insider trading, and highlights the disciplinary role of the media.",
keywords = "insider trading, deterrence, media coverage, risk perception, takeover targets",
author = "Mark Aleksanyan and Jo Danbolt and Antonios Siganos and Betty Wu",
note = "Funding Information: We are grateful to Seth Armitage, Leonidas Barbopoulos, Jay Dahya, Jens Hagendorff, Ian Hirst, Hans Hvide, Chao Jiang, Micaela Maftei, Patrick McColgan, Stephen Penman, Joel Peress, Talis Putnins, Stefan Ruenzi, Sergei Sarkissian, Evangelos Vagenas-Nanos, Chris Veld, Patrick Verwijmeren, participants at the Behavioral Finance Working Group 2019 and the Financial Management Association 2019 conferences, as well as seminar participants at University of Glasgow, University of Kent, National Tsing Hua University and University of Strathclyde, for helpful comments on earlier versions and drafts of this paper. We would also like to thank Christopher Flanagan and Steven Kay for their support with data collection. Jo Danbolt holds the Baillie Gifford Chair in Financial Markets, and his research is partially funded by a Baillie Gifford endowment held by the University of Edinburgh Business School. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Funding Information: Jo Danbolt holds the Baillie Gifford Chair in Financial Markets, and his research is partially funded by a Baillie Gifford endowment held by the University of Edinburgh Business School . This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Publisher Copyright: {\textcopyright} 2022 The Author(s)",
year = "2022",
month = jun,
doi = "10.1016/j.jempfin.2022.04.004",
language = "English",
volume = "67",
pages = "318--342",
journal = "Journal of Empirical Finance",
issn = "0927-5398",
publisher = "Elsevier",
}