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Title: The Efficacy of Market Abuse Regulation in the UK
Authors: Lambe, Brendan John
First Published: 11-Jul-2016
Citation: Journal of Financial Regulation and Compliance, 2016, 24 (3), pp.248 - 267
Abstract: Purpose: The purpose of this paper is to ascertain the efficacy of Financial Services and Markets Act (FMSA) (2000) in deterring illegal insider trading in target companies around the time of a merger and aquisition announcement. Design/methodology/approach: The author uses an event study to measure the cumulative average abnormal returns (CAARs) around both the announcement and rumour date for a sample of UK takeovers between 2001 and 2010. Findings: Statistically significant CAARs prior to the event date are observed across the sample. Research limitations/implications: It is not possible to link unknown instances of illegal insider trading with pre takeover residuals, therefore explaining the residuals remains a deductive process. Practical implications: Pre-event abnormal returns may indicate that trading on material nonpublic information is still a contributory factor in the run-up proportion of takeover premiums. Social implications: This draws a question over the efficacy of the regulatory system. Originality/value: This study provides evidence which points to insider trading activity ahead of Mergers in a post FMSA 200 UK context.
DOI Link: 10.1108/JFRC-06-2015-0029
ISSN: 1358-1988
Version: Post-print
Type: Journal Article
Rights: Copyright © Emerald Publishing, 2016. Archived in accordance with the publisher's self-archiving policy, available at
Appears in Collections:Published Articles, School of Management

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