Buckle-up and accelerate: Insider's private effort during M&A
Abstract
We examine insiders' rent-seeking private efforts during M&As. Using the distinctive setting of trading suspension, we show that insiders not only cherry-pick deals with superior quality, but also actively engage in private efforts to facilitate successful deal closure for higher trading profits. When regulatory tightening inhibits such efforts, insider's abnormal return falls by 395 bps over a 3-day window and the probability of successful deal closure drops by 16.90%. In addition, insiders' private efforts reduce firms' annual stock return by 1% up to two years after successful deal closure, suggesting that insiders' private efforts are usually misleading and value destructive in nature.
Fields of Study & Subjects
Auditing
Earnings Management
Governance
Financial Markets and Investment Strategies
Corporate Finance and Governance
Publication details
- Journal / source
- Emerging Markets Review
- Publisher
- Elsevier BV
- Volume
- 72
- Pages
- 101449–101449
- Publication date
- 14 February 2026
- Language
- EN