Insider trading during company spin-offs

Insider Trading during Company Spin-offs?

Prof. Patrick Augustin

Prof. Patrick Augustin from McGill University in Montreal found strong evidence for insider trading activities during company spin-offs.  During his research he looked at changes to options trading patterns in the affected company. You may remember my first interview with Professor Augustin last year in which he looked at insider trading activities during mergers and acquisitions in the USA.

Play

In his new paper he applies slightly different methods to look into the subject of insider trading. Company spin-offs, just like mergers and acquisitions are not supposed to be public knowledge until the very day of the spin-off announcement. Yet there seem to be a lot of unusual options trading activities during the days before the official announcements. While there may be various reasons for that, the most obvious one that comes to mind immediately would be an “information leak” that was exploited by people in the know. Call it informed trading or insider trading, either way, it is not supposed to happen. But it sure does.

Listen to our short chat about all that.

Links:

Prof. Augustin’s Personal Home Page

Prof. Augustin at McGill University

Link to this latest paper

Link to the 2014 paper on insider trading during mergers and acquisitions

Co-Authors:

Menachem Brenner

Jianfeng Hu 

Marti G. Subrahmanyam

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Research into possible insider trading activities before mergers and acquisitions

An Interview with Prof. Patrick Augustin from McGill University in Montreal about his research into insider trading activities. In an award-winning 2014 Paper he looked into possible insider trading activities

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