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dc.contributor.authorGyoshev, SB
dc.contributor.authorKaplan, TR
dc.contributor.authorSzewczyk, S
dc.contributor.authorTsetsekos, GP
dc.date.accessioned2020-08-14T12:34:19Z
dc.date.issued2020-08-29
dc.description.abstractCompanies have collected billions in premiums from privately sold put options written on their own stock. It is puzzling that counterparties, investment banks, would agree to make such transactions with better-informed companies which have extraordinary ability to time the market as documented by Jenter et al. (2011). To resolve this puzzle, we develop a model that shows that investment banks, by offering to buy put options from better-informed parties, receive private information about issuing companies. Our model also incorporates the practice of firms (such as Microsoft) of sometimes repurchasing their own put options and thus providing additional private information to investment banks. Empirically, we find support for our theory from an abnormal 9% increase in the stock prices and a 40% increase in the trading volumes around the put sales. Examination of 13D filings reveals that trading by upper management insiders cannot completely account for the change in volumeen_GB
dc.identifier.citationArticle 101718en_GB
dc.identifier.doi10.1016/j.jcorpfin.2020.101718
dc.identifier.urihttp://hdl.handle.net/10871/122471
dc.language.isoenen_GB
dc.publisherElsevieren_GB
dc.rights.embargoreasonUnder embargo until 28 February 2022 in compliance with publisher policyen_GB
dc.rights© 2020. This version is made available under the CC-BY-NC-ND 4.0 license: https://creativecommons.org/licenses/by-nc-nd/4.0/  en_GB
dc.subjectScreeningen_GB
dc.subjectSeparating Equilibriumen_GB
dc.subjectPut Optionsen_GB
dc.subjectInformation Acquisitionen_GB
dc.subjectStrategic Tradingen_GB
dc.titleWhy do investment banks buy put options from companies?en_GB
dc.typeArticleen_GB
dc.date.available2020-08-14T12:34:19Z
dc.identifier.issn0929-1199
dc.descriptionThis is the author accepted manuscript. The final version is available from Elsevier via the DOI in this recorden_GB
dc.identifier.journalJournal of Corporate Financeen_GB
dc.rights.urihttps://creativecommons.org/licenses/by-nc-nd/4.0/  en_GB
dcterms.dateAccepted2020-08-13
rioxxterms.versionAMen_GB
rioxxterms.licenseref.startdate2020-08-13
rioxxterms.typeJournal Article/Reviewen_GB
refterms.dateFCD2020-08-14T12:22:44Z
refterms.versionFCDAM
refterms.panelCen_GB


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© 2020. This version is made available under the CC-BY-NC-ND 4.0 license: https://creativecommons.org/licenses/by-nc-nd/4.0/  
Except where otherwise noted, this item's licence is described as © 2020. This version is made available under the CC-BY-NC-ND 4.0 license: https://creativecommons.org/licenses/by-nc-nd/4.0/