Hole in the Wall
Speaker
Abstract
Companies planning a private placement typically gauge the interest of potential buyers before the offering is publicly announced. Regulators are concerned with this practice, called wall-crossing, as it might invite insider trading, especially when the potential investors are hedge funds. We examine privately placed common stock and convertible offerings and find widespread evidence of pre-announcement short selling. We show that pre-announcement short sellers are able to predict announcement day returns. The effects are especially strong when hedge funds are involved and when the number of buyers is high.
The Brown Bag Seminars are sponsored by ERIM.
www.eur.nl/financegroup
Information
- Type
- Research Seminar
- Programme
- Finance & Accounting
- Date
- Wed. 8 May. 2013
- Time
- 12:00 - 13:15
- Location
- G2-26
