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Managerial Insider Trading And Opportunism
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Book Synopsis Managerial Insider Trading and Opportunism by : Mehmet Akbulut
Download or read book Managerial Insider Trading and Opportunism written by Mehmet Akbulut and published by . This book was released on 2007 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines whether managers engage in opportunistic insider trading by measuring how their net open market purchases and holdings of own company stock change around acquisitions, seasoned equity offerings and share repurchases after controlling for their share and option holdings and noninformational motives for trading. On average, managers abnormally increase sales and reduce holdings around stock acquisitions and seasoned equity offerings but not around cash acquisitions and share repurchases. However the typical manager does not experience an economically significant change in ownership; more material ownership changes are limited to the subsets of the sample. These results suggest that the evidence for managerial opportunism is modest in magnitude and not pervasive in the sample.
Book Synopsis Opportunism as a Firm and Managerial Trait by : Usman Ali
Download or read book Opportunism as a Firm and Managerial Trait written by Usman Ali and published by . This book was released on 2018 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: These slides summarize a paper on opportunism by corporate insiders. We show that opportunistic insiders can be identified through the profitability of their trades prior to quarterly earnings announcements (QEAs), and that opportunistic trading is associated with various kinds of firm/managerial misconduct. A value-weighted trading strategy based on (not necessarily pre-QEA) trades of opportunistic insiders earns monthly 4-factor alphas of over 1% -- much higher than in past insider trading literature and substantial/significant even on the short side. Firms with opportunistic insiders have higher levels of earnings management, restatements, SEC enforcement actions, shareholder litigation, and executive compensation. These findings suggest that opportunism is a domain-general trait.See paper at a href="https://ssrn.com/abstract=2635257"https://ssrn.com/abstract=2635257
Book Synopsis Managerial Opportunism and Earnings Surprise: An Investigation of Insider Trading and Perceived Market Valuation Divergence by : Wen Yu
Download or read book Managerial Opportunism and Earnings Surprise: An Investigation of Insider Trading and Perceived Market Valuation Divergence written by Wen Yu and published by . This book was released on 2007 with total page 111 pages. Available in PDF, EPUB and Kindle. Book excerpt: The results of this study indicate managerial opportunism. When the market does not fully assess the valuation implication of accounting accruals, managerial insider trading (broadly conceived to include open market transactions and unscheduled stock-option grants) corresponds to buying or selling behavior associated with managers' private accounting information and the direction of market valuation divergence.
Book Synopsis Seasoned Equity Offerings, Managerial Opportunism, and Insider Trading by : Jan Jindra
Download or read book Seasoned Equity Offerings, Managerial Opportunism, and Insider Trading written by Jan Jindra and published by . This book was released on 2000 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: A major attribute of the United States capital markets is the separation of ownership and control. This separation gives insiders the opportunity to take advantage of private information not available to the market. The issue of whether insiders opportunistically take advantage of their private information is studied in two contexts: seasoned equity issues and earnings manipulation.
Book Synopsis Management Earnings Forecast Bias and Insider Trading by : Afshad J. Irani
Download or read book Management Earnings Forecast Bias and Insider Trading written by Afshad J. Irani and published by . This book was released on 2001 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the association between bias in earnings forecasts released by managers of financially distressed firms and subsequent insider trading. Prior studies have documented optimism in such forecasts. Given this finding, this study investigates whether this optimism is systematically related to opportunistic management behavior or a sincere belief (by management) that their firm's financial situation is going to get better. Abnormal insider trading in the post management forecast period is examined to test these alternative explanations. The findings for the full sample are consistent with the opportunistic view, however the trading activity of non-managerial insiders seems to be the primary driver.
Book Synopsis The Informativeness and Opportunistic Use of Insider Trading by : Jin Jiang
Download or read book The Informativeness and Opportunistic Use of Insider Trading written by Jin Jiang and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation aims to understand how insiders in Asian markets (i.e., China, Hong Kong, Malaysia, Singapore, and South Korea) trade in response to various financial information that are either released by their firms or by third-party, in the framework of agency and signaling theory. This dissertation builds upon three stand-alone papers that explore three different types of accounting settings where financial information is important: (1) auditor opinions, (2) earnings management, and (3) goodwill impairment. The first chapter investigates how insiders trade prior to the issuance of first-time modified audit opinions in an Asian context. I use agency and signaling theoretical frameworks to test the link between insider trading activities and the issuance of different types of modified audit opinions. The second chapter examines whether insiders at politically-connected firms are more likely to manage earnings if they plan to trade stocks after an earnings announcement, compared to insiders at non-connected firms. I use anti-corruption cases involving the ouster of high-level Chinese government officials as a natural experiment setting and adopt difference-in-differences model. The third chapter of my dissertation uses agency and signaling theoretical frameworks to compare insider trading that is informed by impending news of accounting goodwill impairment at firms with positive expectations and at firms with negative expectations regarding prospects in an Asian context.
Book Synopsis Managers' Opportunistic Trading of Their Firm's Shares by : John Scott Jordan
Download or read book Managers' Opportunistic Trading of Their Firm's Shares written by John Scott Jordan and published by . This book was released on 1997 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Providing managers with stock in the firm may help ensure that managers act in the shareholders' interest. The level of managerial stock ownership, however, is not generally controlled by the firm's compensation committee. Rather, managers themselves determine the level of their stock holdings. To date, though, little evidence exists on managers' personal transactions and how these trades affect their overall equity holdings. This analysis provides insight on the trading practices of bank managers. I find that managers do not rely solely on the actions of a compensation committee to set their stock holdings. The assumption that managerial stock holdings are determined solely by the firm's compensation committee is shown to be inaccurate. I provide evidence that managerial open market purchases and sales are both primary determinants of the level of managerial stock holdings. I also show that managers alter their holdings in an opportunistic manner. In general, managers alter their stock holdings when their firm's prospects change. Managers consistently take advantage of private firm-specific information, earning positive abnormal returns on open market purchases while avoiding negative abnormal returns by making open market sales. Evidence suggests that opportunistic trading is most prevalent among managers who face the greatest exposure to their firm's nonsystematic risk. In general, managers appear to "fine tune" the proportion of their wealth that is sensitive to changes in firm value. In effect, this trading increases the rate of return and reduces the riskiness o.
Book Synopsis Genie in a Bottle? Assessing Managerial Opportunism in International Securities Transactions by : Amir N. Licht
Download or read book Genie in a Bottle? Assessing Managerial Opportunism in International Securities Transactions written by Amir N. Licht and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: How should national securities regulators respond to the growing trend of foreign listing and cross-border trading of stocks? This Article argues that regulatory concern and cooperation are warranted in light of the potential for opportunistic behavior by corporate managers and holders of control blocks. It assesses the likelihood and potential severity of managerial opportunism in the particular context of international securities transactions. Metaphorically, such transactions may be seen as bottles with an occasional genie inside.The analysis revolves around the motivations for listing a company?s stocks on a foreign market. The foreign listing decision is motivated by a number of factors, most of which work to the benefit of the company and its shareholders. The existing literature, however, fails to provide a clear picture of the role that managerial self-interest may play in the decision to make (or avoid) a foreign listing and in the choice of the particular foreign market. Theoretical models are not unambiguous and empirical evidence is badly lacking. Existing evidence, however, indicates that the foreign listing decision is likely to be influenced by candidate markets' securities regulation regimes on disclosure and insider trading, which may be purposefully onerous to the management. Consequently, unmitigated regulatory competition based on a presumed international quot;race for the topquot; cannot be relied on completely to remedy the problem.
Book Synopsis The Persistence of Opportunistic Insider Trading by : Brandon N. Cline
Download or read book The Persistence of Opportunistic Insider Trading written by Brandon N. Cline and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We document that corporate insiders' trading behavior exhibits persistence over time. Classifying insiders as “Persistently Profitable (PP)” based on profits generated from historical trades, we find the current transactions of these insiders better predict firm performance. The relative abnormal performance is concentrated in management transactions and in firms with weaker governance and greater information asymmetry. PP insiders also better predict earnings surprises, major corporate news, and analyst revisions. Collectively, these results indicate PP insider transactions provide valid signals regarding future firm performance, and informational advantages over outside investors is a likely explanation for the profitability of PP trades.
Book Synopsis Corporate Governance and Insider Trading by : Konstantin A. Rozanov
Download or read book Corporate Governance and Insider Trading written by Konstantin A. Rozanov and published by . This book was released on 2008 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: I investigate the relation between corporate governance and insider trading by corporate executives. Despite the general view that trade on non-public information adversely affects capital market participants, the impact of corporate governance on such trading remains relatively unexplored in prior research. I propose an empirical measure that relies on a predicted pattern in stock returns to identify transactions that are more likely to be based on private information and provide evidence to validate the construct. Using this measure, I find that good corporate governance, identified through board and ownership characteristics that have been linked to more effective monitoring of management in prior research, is negatively related to opportunistic insider trading. In supplementary analysis, I provide evidence on the robustness of this relation to an alternative hypothesis and to potential endogeneity. Overall, I conclude that good corporate governance helps to attenuate opportunistic insider trading.
Book Synopsis Managerial Opportunism? Evidence from Directors' and Officers' Insurance Purchases by : John Chalmers
Download or read book Managerial Opportunism? Evidence from Directors' and Officers' Insurance Purchases written by John Chalmers and published by . This book was released on 2004 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze a sample of 72 IPO firms that went public between 1992 and 1996 for which we have detailed proprietary information about the amount and cost of Damp;O liability insurance. If managers of IPO firms are exploiting superior inside information, we hypothesize that the amount of insurance coverage chosen will be related to the post-offering performance of the issuing firm's shares. Consistent with the hypothesis, we find a significant negative relation between the three-year post-IPO stock price performance and the insurance coverage purchased in conjunction with the IPO. One plausible interpretation is that, like insider securities transactions, Damp;O insurance decisions reveal opportunistic behavior by managers. This provides some motivation to argue that disclosure of the details of Damp;O insurance decisions, as is required in some other countries, is valuable.
Book Synopsis Investment Intelligence from Insider Trading by : H. Nejat Seyhun
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.
Book Synopsis Voluntary Disclosures and Insider Transactions by : Christopher F. Noe
Download or read book Voluntary Disclosures and Insider Transactions written by Christopher F. Noe and published by . This book was released on 1996 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the association between voluntary disclosures and insider transactions (i.e. transactions made by managers in their own firms' shares). Specifically, insider transaction patterns are analyzed around 949 management earnings forecasts issued by 85 firms between July 1, 1979 and December 31, 1987. The findings show that the incidence of insider transactions decreases prior to management earnings forecasts and increases afterwords. Moreover, the findings show that the likelihood of an insider transaction occurring in the period following a management earnings forecast is related to empirical proxies for the possibility of a manager being privately informed. Overall, these findings are consistent with managers utilizing voluntary disclosures to bond themselves against exploiting private information for insider transaction purposes. Keywords: Information asymmetry; Managerial opportunism; Insider transactions; Management earnings forecasts.
Book Synopsis Insider Trading and Earnings Management by : Julia Sawicki
Download or read book Insider Trading and Earnings Management written by Julia Sawicki and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the relationship between earnings management and insider trading, specifically investigating whether discretionary accruals are related to insider trading and valuation. We find strong evidence of insiders managing earnings downward when buying and managing earnings upward when selling. On the marginal basis, value (high book-to-market value) firms manage their earnings upward compared to growth (low book-to-market value) firms, consistent with a signaling hypothesis. However the opposite is true on the average basis, consistent with an opportunistic hypothesis.
Book Synopsis Portfolio Preferences of Foreign Institutional Investors by : Reena Aggarwal
Download or read book Portfolio Preferences of Foreign Institutional Investors written by Reena Aggarwal and published by World Bank Publications. This book was released on 2003 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Corporate Tax Aggressiveness and Insider Trading by : Sung Gon Chung
Download or read book Corporate Tax Aggressiveness and Insider Trading written by Sung Gon Chung and published by . This book was released on 2018 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the association between corporate tax aggressiveness and the profitability of insider trading under the assumption that insider trading profits reflect managerial opportunism. We document that insider purchase profitability, but not sales profitability, is significantly higher on average in more tax aggressive firms. We also find that the positive association between tax aggressiveness and insider purchase profitability is attenuated for firms with more effective monitoring and is accentuated for firms with a more opaque information environment. In addition, we provide empirical evidence that tax aggressiveness is significantly associated with greater insider sales volume in the fiscal year prior to a stock price crash. Finally, we find that the association between tax aggressiveness and insider purchase profitability weakens after the introduction of FIN 48, consistent with the increased transparency of tax positions under the new disclosure requirement reducing insiders' information advantage and hence their ability to profit from insider trading. To the extent that insider trading profits reflect managerial opportunism, our results are consistent with managers exploiting the opacity arising from tax aggressive activities to extract rent from shareholders, particularly those who sold their shares to the managers. Our findings are particularly important in light of the number of studies relying on the agency view of tax avoidance to develop arguments or to draw inferences.
Book Synopsis Dissecting the Relation Between Insider and Institutional Trading by : He Wang
Download or read book Dissecting the Relation Between Insider and Institutional Trading written by He Wang and published by . This book was released on 2017 with total page 113 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of two essays. In the first essay, we examined the relation between insider trades and institution demand. The literature documents a strong inverse relation between insider trading and institutional demand, suggesting that institutions provide liquidity for insider trading. Motivated by empirical evidence that there is considerable variation of informativeness among institutions and insiders, this paper further examines the relation between insider trading and institutional trading by classifying insiders as opportunistic vs. routine traders and institutions as short-term vs. long-term investors. We find that the inverse relation between insider trading and institutional demand is mainly driven by long-term institutions. In fact, short-term institutions tend to trade in the same direction as opportunistic insiders whose trades are more informative of future stock price changes. The results are stronger for trades on small cap stocks. Further separating officers and directors vs. other insiders, we show that our findings are driven primarily by trades from opportunistic officers and directors.
