The UK context with its distinct regulation on information disclosure during the takeover
period provides an excellent setting to examine how the regulation can affect the roles that
arbitrageurs can play in the takeover game. Using a manually-collected dataset and a
variety of methods to tackle the endogeneity problem, we find supporting evidence on the
importance of disclosure regulation. The UK strict disclosure rule makes it hard for
arbitrageurs to outperform the average investors in the market. Furthermore, being forced
to reveal their identity too soon, the presence of arbitrageurs actually reduces bid
premium. There is little evidence that arbitrageurs can exert influence on the chance that
the bid can go through.