Option Agreement For Sale To Sell The Company's Non-normal Return

Negotiated Trades of Equity (NTE) is one way of M&A to get control of target companies by buying their shares at a negotiated price, which is an outer control mechanism. NTE will lead to a new distribution of corporate control and change the value of target companies. In addition, new share-holder will participate management of the company and improve the management efficiency, which will add value to the company, too. Expected by the stock market, the disclosure of the information will cause volatility of sellers' stock prices in the second market. Compared with western countries, such kind of shares in China are unexchangeable, including state-owned shares and legal person-owned shares, and Chinese stock market is not very mature. That will probably make difference between our conclusions and theirs. The aim of this paper is to find those differences by calculating and analyzing cumulative abnormal returns with event study.