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ABSTRACT
The purpose of this study is to examine the effect of information asymmetry on insider trading activities in hospitality firms. In particular, this study will use a market micro structure approach to detect insider trading activities of hospitality firms prior to merger announcements. Since the payment type of a merger is determined by private managerial information, it can act as a proxy of information asymmetry. Depending on the payment type of a merger, insiders may make different transactions with their private share holdings before the merger announcement. Insider selling (buying) activities may forecast their firm's negative (positive) abnormal performance after mergers.