Abstract
Risk arbitrage involves the purchase of a target firm’s shares on the announcement of a merger or tender offer. These transactions provide a risky profit opportunity when the price of the target is below the risk-adjusted expected value of the final takeover price. This article explores the role of arbitragers in the merger and acquisition of firms, and how their role is important to the process and is not to be confused with insider-trading.
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Bibliography
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This article was first published in The New Palgrave Dictionary of Money and Finance, 1992, edited by John Eatwell, Murray Milgate and Peter Newman and is reproduced here with permission.
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© 2018 Macmillan Publishers Ltd.
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Jensen, M.C. (2018). Arbitrage, Information Theft and Insider Trading. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2945
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2945
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Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
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