This paper investigates how unusual trading volume of stocks precede favourable/unfavourable merger or acquisition announcements. I find that the cumulative abnormal returns after the announcement are on average lower on stocks that experience unusually low or high trading volume prior to the announcement day than on normal volume stocks. My findings contradict slightly with the previous literature, which supports the idea that unusually high trading volume signals more positive future returns. The data consists of the United States stocks from 2002 to 2015. The focus is on the target stocks – i.e. the company being acquired or merged into the buying company
