Abstract
This study examines the stock price effects and volume pattern of the selected companies for the existence of illegal insider trading before a merger. The study is based on Merger/acquisition announcement during 2001 to 2005. The analysis has been done for 20 target companies which are listed in BSE and NSE, this study analyses the stock prices and the trading volume 30 days before an acquisition announcement. In order to study the pattern of stocks the Abnormal returns (AR), Cumulative abnormal returns (CAR) and the abnormal volume has been calculated for the selected target companies in the Indian context. Besides, very little theoretical work has been done by researchers in India. However, with improved availability of databases and computing resources, and with increasing global interest in Indian markets, we expect an explosion of work in the near future.
In this analysis I found that a considerable sample of firms have abnormal return before the actual announcement has taken place and also there are evidence of huge abnormal volume before a public announcement in the given sample.
Introduction
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