The regulation of insider dealing in the UK: Some empirical evidence concerning share prices, merger bids and bidders' advising merchant banks

This paper provides empirical evidence concerning share price performance of both the target and the bidder prior to the public announcement of a merger bid and the inferences which may be made concerning insider dealing, share rigging and the leakage of information associated with advising merchant banks. It is found that almost 75% of the rise in the share price of a target arising from a bid occurs before its announcement. When this is analysed between bidders' advising merchant banks, it is found that this occurs significantly earlier in the case of two major firms - suggesting their association with it. The implications of the empirical study for stock market regulation are discussed.