A model of trading in speculative markets is developed based on differences of opinion among traders. Our purpose is to explain some of the empirical regularities that have been documented concerning the relationship between volume and price and the time-series properties of price and volume. We assume that traders share common prior beliefs and receive common information but differ in the way in which they interpret this information. Some results are that absolute price changes and volume are positively correlated, consecutive price changes exhibit negative serial correlation, and volume is positively autocorrelated.

[We examine the structure of initial takeover bids and the frequency of observing competing bids and target management resistance. We find the use of cash is not consistently correlated with the frequency of competition or resistance and that the cost of acquiring information about a target is associated with the likelihood of competition and resistance. A high bid premium appears to deter competing offers and is also associated with a lower likelihood of resistance. Finally, target management resistance is associated with an increased likelihood of a competing offer arising and a larger increase in target shareholder wealth between the initial public announcement and outcome dates relative to the not-resisted subsample for both successful and unsuccessful acquisition proposals.]

We examine the structure of initial takeover bids and the frequency of observing competing bids and target management resistance. We find the use of cash is not consistently correlated with the frequency of competition or resistance and that the cost of acquiring information about a target is associated with the likelihood of competition and resistance. A high bid premium appears to deter competing offers and is also associated with a lower likelihood of resistance. Finally, target management resistance is associated with an increased likelihood of a competing offer arising and a larger increase in target shareholder wealth between the initial public announcement and outcome dates relative to the not-resisted subsample for both successful and unsuccessful acquisition proposals.