Download or read book Insider Trading and the Post Earnings Announcement Drift written by Christina Dargenidou and published by . This book was released on 2017 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that trades by corporate insiders after an earnings announcement determine in part the extent of the post-earnings announcement drift anomaly. Contrarian trades mitigate the under-reaction to earnings announcements, and confirmatory trades allow for price discovery with price movements continuing in the same direction of the earnings surprise. These results are consistent with insider trading being a mechanism that provides relevant information on transitory or permanent changes to the earnings process allowing the market to make appropriate inferences about the nature of the earnings surprise.
Download or read book Insider Trading and Response to Earnings Announcements written by Semih Tartaroglu and published by . This book was released on 2017 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper contributes to the debate on the consequences of increased disclosure regulation by investigating the effects of expedited reporting requirements of Form 4 filings, mandated by the Sarbanes-Oxley Act (SOX), on the market response to earnings announcements. We first confirm that SOX reduces opportunistic insider trading without deterring insider trading due to diversification needs, and that post-SOX, opportunistic insider trades more strongly reveal upcoming earnings surprises. We then document that, at the earnings announcement date, earnings response coefficients (ERCs) are lower when earnings are preceded by opportunistic insider trades. We conclude that accelerated disclosures of insider transactions mandated by SOX lend to more informationally efficient prices prior to earnings announcements. Our findings stand as one piece of evidence suggesting positive externalities from recent Securities and Exchange Commission (SEC) disclosure regulation and add to the scarce evidence on the consequences of changes in Form 4 filing requirements.
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 452 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 Do Insiders Trade on Mispricing After Earnings Announcements written by Jana P. Fidrmuc and published by . This book was released on 2016 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper conjectures that insiders exploit their stock's mispricing after earnings announcements to make profitable trades. We design two sets of tests to provide evidence of insider trading on mispricing of their stock. First, insiders' purchases and sales are profitable both after positive and negative earnings surprises, which indicates that their trading strategies are superior to simple contrarian or momentum trading strategies. Second, we estimate a model of 'normal' market reaction to an earnings announcement and use the deviation of the fitted value from the realized market reaction as our measure of mispricing after earnings announcements. In line with the mispricing hypothesis, we show that insiders sell (buy) more often after large positive (negative) values of our mispricing measure and earn significant post trading returns.
Download or read book Insider Trading Activity Surrounding Corporate Earnings Announcement written by Sechoul Park and published by . This book was released on 1992 with total page 256 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 The Importance of Postevent Insider Trading written by Jon A. Garfinkel and published by . This book was released on 1994 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Insider Trading Around Earnings Announcements written by Harold Contreras and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Further Evidence on the Strategic Timing of Earnings News written by Roni Michaely and published by . This book was released on 2016 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using combinations of weekdays and times of day (before, during, and after trading hours) of earnings announcements, we examine whether managers attempt to strategically time these announcements. We document that the worst earnings news is announced on Friday evening and find robust evidence that only Friday evening announcements represent managers' rational opportunistic behavior. Friday evening announcements are followed by insider trading in the direction of earnings news and the largest post-earnings announcement drift. Managers also attempt to reduce interaction with investors and hide more than just earnings news by announcing on Friday evening. We find that Friday evening announcements occur later in the evening than announcements on other evenings, firms have a reduced propensity to hold conference calls, and major firm restructuring events are relatively more likely to occur after Friday evening announcements.
Download or read book Investor Trading and the Post Earnings Announcement Drift written by Benjamin C. Ayers and published by . This book was released on 2011 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether the two distinct post-earnings-announcement drifts associated with seasonal random walk-based and analyst-based earnings surprises are attributable to the trading activities of distinct sets of investors. We predict and find that small (large) traders continue to trade in the direction of seasonal random walk-based (analyst-based) earnings surprises after earnings announcements. We also find that when small (large) traders react more thoroughly to seasonal random walk- (analyst-) based earnings surprises at the earnings announcements, the respective drift attenuates. Further evidence suggests that delayed small trades associated with random walk-based surprises are consistent with small traders' failure to understand time-series properties of earnings, whereas delayed large trades associated with analyst-based surprises are more consistent with a longer price discovery process. We also find that the analyst-based drift has declined in recent years.
Download or read book The Insider s Dossier written by Andrew Packer and published by Humanix Books. This book was released on 2014-04-22 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Insider’s Dossier will seamlessly guide you through investing alongside the most in-the-know professionals, debunking the widespread myth that insider trading is illegal. Not only is it legal when following proper protocol, but author Andrew Packer helps you to decode the Wall Street lingo, so that even the novice could easily follow corporate insiders for returns that significantly outperform the market year over year. In easy-tounderstand terms, Packer describes: • The difference between legal and illegal insider trading • How to evaluate insider activity in order to optimize your investment advantage • The key to swiftly decoding SEC filing forms for up-to-the-minute insider activity • Understanding and utilizing web-based, technical analysis tools • How to separate key insiders from the average corporate investor • Investing beyond simple trades, clearly and concisely explaining the ins and outs of options trading, and much more. . . About
Download or read book The Impact of the London Stock Exchange Model Code on Insider Trading in the UK written by Andrew P. Marshall and published by . This book was released on 1997 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: The London Stock Exchange Model Code (1977)imposes a two month close period prior to company earnings announcements where corporate insiders are banned from trading in their own company's securities. We find that although the close period affects the timing of insider trades surrounding both final and interim earnings announcements, it does not affect the performance or distribution of buy and sell trades. Insiders consistently earn abnormal returns irrespective of the pre and post earnings announcement period in which they trade. They tend to buy after abnormally bad earnings news and sell after abnormally good earnings news. We find systematic differences in trading patterns of insiders surrounding interim and final earnings announcements, which may be due to the different form and content of these two statements. It appears that many insiders have private information and exploit this in their trading activities. As a result, we conclude that restrictions as laid down by the Model Code do not impose significant opportunity costs on the trading of insiders. This has implications on the current debate on whether insider trading should be regulated.
Download or read book Insider Trading at the Turn of the Century written by Semih Tartaroglu and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Insider trading may convey information to the market and promote accurate pricing of stocks. In this dissertation, I investigate insider trading at the turn of the century. In the first essay, I investigate insider trading activity in technology stocks during the high price - high volatility period of the late 1990s. I document that insiders of technology firms were heavy sellers during the ten month pre-peak period in which stock prices more than doubled. The technology stocks that were sold by insiders more extensively in the pre-peak period had lower returns in the post-peak period. I furthermore investigate the relation between the net order flows (buyer initiated minus seller initiated trades) and abnormal insider trading activity. I document that the net order flow is positively related to abnormal insider trading activity. However, this positive relation becomes weaker in the peak period; which implies less price discovery through insider trading during the rise of technology stock prices. In the second essay, I document that disclosure requirements significantly affect insider trading behavior. The Sarbanes-Oxley Act of 2002 requires expedited and on-line disclosure of insider transactions. This increase in the visibility of insider trading reduces informational advantage of insiders and increases the likelihood of facing legal sanctions for insiders. I document that insider purchases significantly declined after the Sarbanes- Oxley Act. In addition, the incidences of insider purchases (sales) prior to positive (negative) earnings surprises declined after the Act. Finally, I document that the earnings announcements become more informative after the Act, which is consistent with less price discovery through insider trading prior to earnings announcements. However, the evidence that the decline in insider trading contributes to more informative earnings announcements is pronounced for insider purchases but not for insider sales.
Download or read book Information Trading and Product Market Interactions written by Heather Elise Tookes and published by . This book was released on 2003 with total page 592 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Jeopardy Non Public Information and Insider Trading Around SEC 10 K and 10 Q Filings written by Steven J. Huddart and published by . This book was released on 2006 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Evidence contrasting U.S. insider trades in high- and low-jeopardy periods and across firms at high and low risk for 10b-5 litigation indicates that insiders condition their trades on foreknowledge of price-relevant public disclosures, but avoid profitable trades when the jeopardy associated with such trades is high, such as immediately before earnings announcements. Insiders avoid profitable trades before quarterly earnings are announced and sell (buy) after good (bad) news earnings announcements. Insiders trade most heavily after earnings announcements and profit from foreknowledge of price-relevant information in the forthcoming Form 10-K or 10-Q filing.
Download or read book The Walk Down to Beatable Analyst Forecasts written by Scott A. Richardson and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: It has been alleged that firms and analysts engage in an earnings guidance game where analysts first issue optimistic earnings forecasts and then 'walk down' their estimates to a level firms can beat at the official earnings announcement. We examine whether the walk-down to beatable targets is associated with managerial incentives to sell stock after earnings announcements on the firm's behalf (via new equity issuance) or from their personal accounts (through option exercises and stock sales). Consistent with these hypotheses, we find that the walk-down to beatable targets is most pronounced when firms or insiders are net sellers of stock after an earnings announcement. These findings provide new insights on the impact of capital market incentives on communications between managers and analysts.
Download or read book Insider Trading Disclosure Information Asymmetry and Differential Earnings Relevance as Indicated By Trading Volume written by Donn W. Vickrey and published by . This book was released on 2007 with total page 14 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use buy and sell signals derived from insider trading disclosures to identify experimental-group cases in which decreases in earnings-related predisclosure information asymmetry have arisen through the use of the disclosures. For each experimental firm, each earnings-announcement date is preceded, within 90 days, by at least 2 specific buy or 2 specific sell signals, while none of these signals occurs within 90 days of any control group earnings-announcement date. Our null hypothesis is that mean differences in experimental and control group earnings-announcement-period trading volumes are greater than or equal to similar mean differences occurring over contiguous non-announcement periods. Rejection of our null, for various periods, implies less earnings relevance for our experimental group vis-agrave;-vis our control group as a consequence of decreases in earnings-related predisclosure information asymmetry for the latter. This result is consistent with the view that changes in firms' information environments are the most pervasive factor explaining secular changes in earnings relevance.
