An Analysis of Prices, Bid/Ask Spreads, and Bid and Ask Depths Surrounding Ivan Boesky's Illegal Trading in Carnation's Stock

Abstract

During the three-month period prior to the acquisition of Carnation by Nestle in 1984, Ivan Boesky purchased 1.7 million shares of Carnation’s stock on the basis of illegally obtained inside information. Detailed records of Boesky’s trades permit us to examine the relation between his trading and Carnation’s stock price, bid/ask spread, and bid and ask depth. We find a positive and significant relation between Boesky’s trades and stock price changes, but bid/ask spreads appear to be unaffected, and depths appear to be unaffected or improved by his trades.

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