Stock Trading before the Announcement of Tender Offers: Insider Trading or Market Anticipation?

Recent insider trading actions by the government against Dennis Levine, Ivan Boesky, Martin Siegel, and others have influenced the public's perception of mergers and acquisitions activity.' These well-publicized cases generally involve illegal insider trading based on nonpublic information about impending bids for takeover targets.2 Many regulators have interpreted public concern about illegal insider trading as political support for legislative proposals to restrict takeovers. These regulators argue that increased trading in stocks of tender offer targets before bid announcements indicates the pervasive nature of insider trading. Congressman Edward Markey (DMass.), chairman of the House Telecommunications and Finance Subcommittee, provides an example of how policymakers connect hostile takeovers

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