Assistant Professor of Finance, Texas A & M University. This paper is based on my University of Oregon dissertation. I gratefully acknowledge the guidance and assistance of my dissertation committee: Alyce Campbell, Mike Hopewell, and especially Wayne Mikkelson (chairman). I also wish to thank John Byrd, John Cresson, Dave Dubofsky, Paul Halpern, Sherry Jarrell, Robert Kieschnick, Tim Opler, Ed Rice, Rick Ruback, and Mike Vetsuypens for their detailed and thoughtful suggestions.
Management Buyout Proposals and inside Information
Article first published online: 30 APR 2012
1992 The American Finance Association
The Journal of Finance
Volume 47, Issue 3, pages 1061–1079, July 1992
How to Cite
LEE, D. S. (1992), Management Buyout Proposals and inside Information. The Journal of Finance, 47: 1061–1079. doi: 10.1111/j.1540-6261.1992.tb04005.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
This paper explores stock price behavior surrounding withdrawn buyout proposals to determine whether managers' proposal announcements reveal any information which is unrelated to the efficiency gains associated with completed buyouts. On average, firms whose managers withdraw buyout proposals do not sustain significantly positive stock price effects unless they receive subsequent acquisition bids. In addition, managers of firms with completed buyouts are no more likely to have access to inside information than managers who withdrew proposals. I interpret this evidence as inconsistent with the notion that inside information commonly motivates management buyout proposals.