Download or read book Strategic Disclosure Timing and Insider Trading written by Marina Niessner and published by . This book was released on 2015 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: I provide evidence that managers strategically manipulate their company's information environment to extract private benefits. Exploiting an SEC requirement that managers disclose certain material corporate events within five business days, I show that managers systematically disclose negative events when investors are more distracted, causing returns to under-react for approximately three weeks. Strategic disclosure tim- ing is concentrated among smaller firms with high retail-investor ownership and low analyst coverage. Furthermore, I use the fact that most insider sales are scheduled in advance to demonstrate that top managers are more than twice as likely to strategically time disclosures if the return under-reaction benefits their insider sales. Finally, I find that firms that systematically disclose negative news on Fridays have higher levels of earnings management.

Download or read book Insider Trading written by Yun Ma and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate executives are prohibited from trading on material nonpublic information. In 2000, the SEC enacted Rule 10b5-1, which allows insiders to preplan their transactions before being aware of material nonpublic information. However, do corporate executives subsequently influence the timing and content of information disclosure to benefit their preplanned trades? We examine cumulative abnormal returns (CARs) around insider transactions and document patterns suggesting that insiders are "perfect" timers. That is, stock prices go up (go down) prior to but drop (back up) after insider sells (buys). Further classifying insider trades into preplanned (routine) trades and non-preplanned (opportunistic) trades, we show that the stock return patterns hold not only for non-preplanned (opportunistic) trades but also for preplanned (routine) trades. Using 8-K filings as a proxy of corporate discretionary disclosure, we find that there are significantly more 8-K filings prior to insider trades than during normal times. Moreover, based on the sentiment score from RavenPack News Analytics, we find that analyst reports and corporate news releases both have significant explanatory power of stock returns around insider transactions. The evidence documented in our study cannot rule out the hypothesis that corporate executives influence the timing and content of information disclosure to benefit their preplanned trades. In the second part of my dissertation, we investigate in insider trading's implications on stock returns. The literature posits that insiders are contrarian, i.e., buy stocks when they are under-valued and sell stocks when they are over-valued. In addition, insider transactions contain information about future firm fundamentals. As such, insider trading helps improve stock price efficiency and promote stock price discovery. In this study, we test the implications of both hypotheses. First, we follow the literature and identify undervalued and overvalued stocks and examine whether insider trades help correct mispricing of these stocks. Second, we examine whether insider trades contain more information about future firm fundamentals for mispriced stocks and the extent to which insider trades incorporate future fundamental information into stock prices. Our findings indicate that insider transactions play a role in correcting mispricing. However, the effect is significant mainly for overvalued stocks over short-term and undervalued stocks over long-term. In addition, we find that insider transactions contain information about long-term future firm fundamentals mainly for overvalued stocks. Nevertheless, our analysis suggests that insider transactions only incorporate a small fraction of future firm fundamental information into stock prices. To sharpen our analysis, we exclude pre-scheduled or routine insider trades, which are believed to be less informed of stock valuation and replicate our empirical tests, and show that our main findings are consistent.

Download or read book Insider Trading and Voluntary Disclosures written by Qiang Cheng and published by . This book was released on 2013 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We hypothesize that insiders strategically choose disclosure policies and the timing of their equity trades to maximize trading profits, subject to the litigation costs associated with disclosure and insider trading. Accounting for endogeneity between disclosures and trading, we find that when managers plan to purchase shares, they increase the number of bad news forecasts to reduce the purchase price. In addition, this relation is stronger for trades initiated by chief executive officers than those initiated by other executives. Confirming this strategic behavior, we find that managers successfully time their trades around bad news forecasts, buying fewer shares beforehand and more afterwards. We do not find that managers adjust their forecasting activity when they are selling shares, consistent with higher litigation concerns associated with insider sales. Overall, our evidence suggests that insiders do exploit voluntary disclosure opportunities for personal gain, but only selectively, when litigation risk is sufficiently low.

Download or read book The Strategic Timing of Corporate Disclosures written by Gerard Gennotte and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: An important element of a firm's disclosure strategy is the timing of its mandatory public announcements. In this paper, two aspects of disclosure timing are examined. The first is the intraday timing of earnings announcements. It is demonstrated here that, under reasonable conditions, market prices reflect better the valuation implications of an earnings announcement when it is made during trading hours rather than after the market has closed. This implies that managers should prefer to release earnings with positive (negative) implications for firm value during (after) trading hours. The second issue examined is the sequencing of multiple corporate disclosures. It is shown that if the announcements have positive (negative) implications for firm value, managers should prefer to make them separately (simultaneously), as market prices better reflect the valuation implications of multiple announcements when they are made at different times.

Download or read book Insider Trading strategy Based on the Information Content of Form 4 Disclosure written by 郭政銓 and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Advance Disclosure of Insider Trading written by Stephen Lenkey and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a strategic rational expectations equilibrium framework, we show that forcing a well-informed insider to disclose her trades in advance tends to increase welfare for both the insider and less-informed outsiders. Advance disclosure generates price risk for the insider, and to mitigate this risk, the insider trades less aggressively on her private information. Consequently, outsiders face lower adverse selection costs, which improves risk sharing and increases welfare. The drop in trading aggressiveness also causes market efficiency to decline. Furthermore, pretrade disclosure encourages excessive risk taking but may either encourage or discourage managerial effort.

Download or read book Strategic Insider Trading in Continuous Time written by Knut K. Aase and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Insider Trading written by Paul U. Ali and published by CRC Press. This book was released on 2008-08-22 with total page 452 pages. Available in PDF, EPUB and Kindle. Book excerpt: Insider trading has long been considered an endemic feature of the world's financial markets. It is unsurprising that the recent growth in mergers and acquisitions worldwide has been accompanied by a growth in insider trading, on a scale not witnessed since the 1980's takeovers boom. Insider Trading: Global Developments and Analysis brings together the latest law and finance research on insider trading. It provides expert coverage on the established US, European, and Asia-Pacific securities markets, as well as the key emerging markets of Brazil and the greater China region. Providing high interest and up-to-date content, the book features several recent cases, including that of Martha Stewart.

Download or read book Insider Regulation and Timely Disclosure written by Klaus J. Hopt and published by Springer. This book was released on 1996-02-27 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: The general problems regarding the timely topic of regulation of insider dealing and timely disclosure of new facts are discussed in a comparative fashion in this lecture in the light of the EC Directive of 13 November 1989 And The German Securities Exchange Act. In particular, attention is given to efforts to harmonize German law with the EC Directive.

Download or read book Insider Trade Disclosure Market Efficiency and Liquidity written by Andrea M. Buffa and published by . This book was released on 2014 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Is a more transparent market also more efficient and liquid? We address this question by analyzing the impact of mandatory ex-post disclosure of corporate insider trades in a dynamic model of strategic risk averse insider trading. We show that trade disclosure reduces informational efficiency of prices, may cause the market to be less liquid, and may even increase insiders' expected utility. In a more transparent market, the informed trader uses a less aggressive trading strategy in order to prevent the market maker from perfectly inferring the private information from public records, and to maintain her informational advantage over time. Our results then question the effectiveness of disclosure regulations.

Download or read book Hiding in Plain Sight written by M. Todd Henderson and published by . This book was released on 2012 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Can voluntary disclosure be used to enhance insiders' strategic trade while providing legal cover? We investigate this question in the context of 10b5-1 trading plans. Prior literature suggests that insiders lose strategic trade value if their planned trades are disclosed. But disclosure might enhance strategic trade because courts can only consider publicly available evidence from defendants at the motion to dismiss phase of trial. This practice can enhance legal protection for firms that disclose planned trades, especially those disclosing detailed information. Consistent with increased legal protection, we find that voluntary disclosure of planned trades increases with firm litigation risk and potential gains to insiders' trades. We also find that insider sales and abnormal returns are higher for disclosed plans, especially those that articulate specific plan details. This suggests that voluntary disclosure, which is conventionally thought to reduce information asymmetries, can create legal cover for opportunistic insider trading.

Download or read book Investment Intelligence from Insider Trading written by H. Nejat Seyhun and published by MIT Press. This book was released on 2000-02-28 with total page 443 pages. Available in PDF, EPUB and Kindle. Book excerpt: Learn how to profit from information about insider trading. The term insider trading refers to the stock transactions of the officers, directors, and large shareholders of a firm. Many investors believe that corporate insiders, informed about their firms' prospects, buy and sell their own firm's stock at favorable times, reaping significant profits. Given the extra costs and risks of an active trading strategy, the key question for stock market investors is whether the publicly available insider-trading information can help them to outperform a simple passive index fund. Basing his insights on an exhaustive data set that captures information on all reported insider trading in all publicly held firms over the past twenty-one years—over one million transactions!—H. Nejat Seyhun shows how investors can use insider information to their advantage. He documents the magnitude and duration of the stock price movements following insider trading, determinants of insiders' profits, and the risks associated with imitating insider trading. He looks at the likely performance of individual firms and of the overall stock market, and compares the value of what one can learn from insider trading with commonly used measures of value such as price-earnings ratio, book-to-market ratio, and dividend yield.

Download or read book Evidence on Quasi Private Information and Insider Trading written by Martha L. Carter and published by . This book was released on 2014 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the informational content of corporate insider buying activity and argue that the market impact of insiders' transactions varies based on the length of interval between the insider buying activity and the disclosure of information to the public. Based on a sample obtained from the Washington Service Insider Trade database, we find that (i) the informational content of insider transactions leaks out prior to the SEC announcement, (ii) information leakage is positively associated with the length of the interval between the insider buying activity and the SEC announcement, (iii) information leakage is only marginally different between CEOs and other officers, and (iv) those insiders with the longest delay in reporting have the greatest total impact on stock prices. The findings suggest that insiders are able to manipulate the impact of their buying activity on stock prices with their disclosure timing.

Download or read book The Art of Investing written by Tony Pow and published by . This book was released on 2020-06-07 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: Insider trading is legal once the material information has been made public, at which time the insider has no direct advantage over other investors. The SEC, however, still requires all insiders to report all their transactions. So, as insiders have an insight into the workings of their company, it may be wise for an investor to look at these reports to see how insiders are legally trading their stock."My additions to conventional insider tradingHopefully my additions improve the performance of this strategy that has already been proven to work most of the time.-I add market timing to Insider Trading. You need to sell most stocks except contra ETFs before or during a market plunge and buy them back as indicated by the chart; I provide a simple marketing technique without charts. -Diversify your portfolio. Keep 10 stocks for a portfolio less than a million. Ensure that there are not more than 3 stocks in the same sector. Keep 20 stocks for portfolio over a million. Too many stocks would require more of your time that would be better spent in evaluating individual stocks. However, keeping too few of stocks would impact your portfolio when one stock has a big loss. It is just a recommendation. Vary your holding size and holding period according to your time, your portfolio size and your knowledge in investing. -Stick with stocks over $2, average daily volume over 12,000 shares (8,000 for stock prices over $20) and market cap over 200 million. Most big winners usually are in the price range between the $2 and $15 price and market cap between 200 million to 800 million. They represent the stocks that institutional investors are ignoring due to their restrictions. This is just a general guideline and there are always exceptions. Change them according to your requirements.I prefer to skip stocks from most emerging countries, especially the smaller companies, as I do not trust their financial statements.-Ignore the subscription services or books claiming they are making over 30% consistently. Some even have examples of making 5,000%. Most likely they tell you their winners but not their losers. It is easy to pick up winners that fit their strategies, but they do not tell you the real performance. Check whether their portfolio uses cash, as it cannot be manipulated such as using the best prices of the day to trade. I bet that most portfolios consistently making over 30% are not real. Alternatively, they have 10 portfolios, and they only show you the one that makes a good profit. When they back test their strategies, they cheat their performances with survivor bias (i.e. those bankrupt stocks are not in the historical database). If their returns are that great, do you think they will share their secrets with you?Many made real a great fortune, but lost it all on a bad bet. So, the turtle investors who make small profits consistently fare far better than making millions in a year and losing it all in the next year. Market timing and diversifying our portfolio are our tools and they will make beat the market in the long run.Size: 65 pages (6*9).Initial date: 06/2020

Download or read book Insider Trading written by William K. S. Wang and published by Aspen Publishers. This book was released on 1996 with total page 1128 pages. Available in PDF, EPUB and Kindle. Book excerpt: Here, at last, is a clear, practical guide on what's legal and what isn't in insider trading. It's the only book that gives you everything you need to: Identify every potential source of insider trading liability -- Deter inadvertent violations with an effective compliance program -- Raise powerful defenses to government and private actions, formations, and transactions. With comprehensive, up-to-date coverage and analysis of such significant aspects as government enforcement, which private plaintiffs can sue, and transnational transactions, you'll find more information -- and more readily usable strategy -- than in any other source on the subject. In one convenient volume, Insider Trading shows you all the ways to avoid liability exposure under all applicable law, including: The Supreme Court case, United States v. O'Hagan -- Federal mail and wire fraud statutes -- Section 10(b) and Section 16(b) -- Bilateral treaties and SEC memoranda with 21 foreign jurisdictions -- Transnational transactions -- State law pitfalls.

Download or read book The Timing of Earnings Announcements written by Jeffrey T. Doyle and published by . This book was released on 2009 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Beginning with Patell and Wolfson (1982), several papers have documented that earnings announcements made after the market closes and/or on Fridays tend to contain worse earnings news than those made at other times. One hypothesis is that opportunistic managers release earnings at these times of decreased media attention to quot;hidequot; their bad news and reduce the associated market penalty. Using firm-level tests that focus on only those firms that switch their disclosure timing (rather than consistently report at the same time), we find no evidence that managers opportunistically report worse news after the market closes or on Fridays. We then explore other determinants of the timing decision, including the more benign hypothesis that managers with worse earnings news release earnings after the market closes to more broadly disseminate the information. Consistent with desiring more time for the market to assimilate the announcement, we find some evidence that more complex firms tend to announce earnings after the market closes. We also find that these announcements are associated with greater abnormal volume, possibly indicating a successful dissemination strategy. We also find that the corporate headquarters location, the size of the firm, the number of analysts covering the firm, and industry membership are all significant explanatory variables for the timing decision. Overall, our findings are consistent with efficient capital markets that are effective at monitoring new information, regardless of the time of the announcement.

Download or read book Insider Trading and Sentiment Trading written by Karl Ludwig Keiber and published by . This book was released on 2015 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies strategic insider trading in continuous time when sentiment traders are present in the securities market. In equilibrium, we characterize both the insider's trading strategy and the market maker's pricing rule. We find that both the insider's trading aggressiveness and the insider's unconditional expected profits are decreasing in the informational content of sentiment trading. The impact of the sentiment traders' trading activity is reported to be non-monotonic. We identify securities markets in which the sentiment traders' trading activity increases or decreases both the insider's trading aggressiveness and the insider's expected profits, respectively. The securities market's liquidity is found to be independent of the informativeness of sentiment trading. But, the depth of the securities market increases in the sentiment traders' trading activity. Finally, sentiment trading does not affect the price discovery process adversely. We conclude that sentiment trading does not impose any negative externality to the securities market at all. Caring about market quality, regulators should not be worried about sentiment trading at all.