Abstract
This paper examines the impact of published news regarding potential takeovers on the pre-announcement price behavior of takeover targets. For takeovers occurring in 1985 and 1986 it is found that price run-ups are significantly greater for firms which are in the news as potential takeover targets relative to those firms not so featured. For firms which are not in the news as potential targets, price run-up is absent up to one day before the actual announcement. While public information explains a significant part of the pre-announcement price run-ups for firms in the news, there is also evidence of substantial pre-news price run-ups.
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