The Roles Of Arbitrageurs - UK evidence
The UK context with its distinct regulation on information disclosure during the takeover period provides an excellent setting to examine how the regulation can affect the roles that arbitrageurs can play in the takeover game. Using a manually-collected dataset and a variety of methods to tackle the endogeneity problem, the authors find supporting evidence on the importance of disclosure regulation. The UK strict disclosure rule makes it hard for arbitrageurs to outperform the average investors in the market. Furthermore, being forced to reveal their identity too soon, the presence of arbitrageurs actually reduces bid premium. There is little evidence that arbitrageurs can exert influence on the chance that the bid can go through.