Disclosure of mergers without regulatory restrictions: Insider trading in pre-1914 Germany

In the pre-World-War I period, lacking regulatory restrictions allowed ‘hidden’ mergers; however, some companies disclosed information voluntarily. I analyze insider gains by investigating the share price behavior prior to merger announcements. When companies hid information, stocks exhibited positive abnormal returns prior to newspaper reports that uncovered hidden transactions. My paper was presented at the NBER conference on ‘Developing and Sustaining Financial Markets’; accordingly, I thank Marc Weidenmier for his excellent comments as well as Lance Davis, Larry Neal, and Eugene White. I am also grateful for the comments I received at the annual meeting of the Economic History Society. Citation: Kling, Gerhard, (2008) "Disclosure of mergers without regulatory restrictions: Insider trading in pre-1914 Germany." Economics Bulletin, Vol. 7, No. 2 pp. 1-7 Submitted: October 15, 2007. Accepted: January 5, 2008. URL: http://economicsbulletin.vanderbilt.edu/2008/volume7/EB-07G10015A.pdf