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Information Content Of Insider Trading Around Seasoned Equity Offering
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Book Synopsis Information Content of Insider Trading Around Seasoned Equity Offering by : Oliver M. Rui
Download or read book Information Content of Insider Trading Around Seasoned Equity Offering written by Oliver M. Rui and published by . This book was released on 2003 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines insider trading around seasoned equity offering announcements in Hong Kong. Consistent with prior studies, we find positive (negative) abnormal returns associated with the announcement of placings (rights offerings). We find evidence that suggests insiders of placing firms delay trading to avoid legal and market penalties. Mature firms are more undervalued relative to growth firms in the placing sub-sample. Furthermore, insiders sell (buy) because of a negative (positive) price response for mature (growth) firms in the rights offering sub-sample. The stock price response to the information content of insider trading depends on the type of security offered. A positive price response is observed for growth firms that announce placements. In general, growth opportunities rather than insider trading explain longer-term investment returns.
Book Synopsis Earnings Management and Insider Trading Around Seasoned Equity Offerings by : Loretta Nartekie Baryeh
Download or read book Earnings Management and Insider Trading Around Seasoned Equity Offerings written by Loretta Nartekie Baryeh and published by . This book was released on 2008 with total page 164 pages. Available in PDF, EPUB and Kindle. Book excerpt: Given the information asymmetry between insiders and investors involved in SEO regarding the firm's plans on how to invest the proceeds from the SEO and the consequent effect on firm's value, insiders have an opportunity to engage in profitable insider trading. This, in turn, provides the market with a signal on firm's intentions. In this study, I examine a sample of 1555 firms that conducted SEOs in the 1987 to 2005 period and their insiders' trading pattern. I find that firms engage in aggressive earnings management to inflate reported earnings. Insiders of SEO firms exhibit the contrarian pattern of trading as shown by my findings of upwards earnings management for value firms. The market is aware of the importance of the insider trading signal. Still, insider trading patterns before and after the SEO year suggest that the market is unable to value the firm correctly. The Sarbanes-Oxley Act of 2002 decreased the scope of earnings management by SEO firms.-- Abstract.
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 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 Seasoned Equity Offerings, Insider Trading, the Signaling Hypothesis by : Young Hwan Lee
Download or read book Seasoned Equity Offerings, Insider Trading, the Signaling Hypothesis written by Young Hwan Lee and published by . This book was released on 1992 with total page 240 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.
Book Synopsis Using Insider Trading to Infer the Information Content of Equity-Selling Mechanisms by : YiLin Wu
Download or read book Using Insider Trading to Infer the Information Content of Equity-Selling Mechanisms written by YiLin Wu and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Extant research finds mixed empirical results regarding whether private placement firms are undervalued. Hertzel and Smith (1993) suggest that private placements are undervalued. On the other hand, Krishnamurthy et al. (2004) and Hertzel et al. (2002) show that, similar to public offering firms, private placement firms experience significant negative post-announcement stock price performance. This paper uses estimated residuals from the insider trade regressions (abnormal insider trading) to measure private information. Results show that the probability of making private placements increases with the abnormal insider purchases and decreases with the abnormal insider sales. This is consistent with the hypothesis that private placement firms are undervalued.
Book Synopsis Another Welfare Effect of Insider Trading? An Empirical Analysis of Insider Trading Around Seasoned Equity Offering in Japan by : Hatsuru Morita
Download or read book Another Welfare Effect of Insider Trading? An Empirical Analysis of Insider Trading Around Seasoned Equity Offering in Japan written by Hatsuru Morita and published by . This book was released on 2016 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: While it is well known that insider trading transfers wealth from uninformed market participants to informed insiders, it is not obvious whether insider trading bring welfare effect. This paper explores an answer to this issue, employing stock trading data around SEO in Japan. An announcement of SEO usually decreases the stock price of the issuing company, creating an opportunity for insiders to sell short before the announcement and to make benefit. If this short sale before the announcement lowers the final offering price, the insider trading reduced the financing amount of the issuing company and we can say that the insider trading caused a welfare loss. The paper tests whether this prediction holds employing Japanese stock market data. The paper does not find welfare loss caused by insider trading around SEO.
Book Synopsis Long-Run Performance and Insider Trading in Completed and Canceled Seasoned Equity Offerings by : Kathleen M. Kahle
Download or read book Long-Run Performance and Insider Trading in Completed and Canceled Seasoned Equity Offerings written by Kathleen M. Kahle and published by . This book was released on 2015 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides evidence on managerial motives for raising equity by examining long-run performance and insider trading around canceled and completed seasoned equity offerings (SEOs). Insider selling increases prior to completed and canceled SEOs, but declines afterward only for canceled offerings. For completed SEOs, pre-filing insider trading is related to long-run performance after completion. For canceled SEOs, pre-filing insider trading is related to stock performance between filing and cancellation. Finally, changes in insider trading around SEO filing effect the probability of cancellation. Overall, the evidence is consistent with insiders exploiting windows of opportunity by attempting to issue overvalued equity, and canceling theissue when the market reaction to the announcement eliminates the overvaluation.
Book Synopsis Does Insider Trading Always Increase Financial Friction? A Model of Equity Market with Information Asymmetry by : Ying Jiang
Download or read book Does Insider Trading Always Increase Financial Friction? A Model of Equity Market with Information Asymmetry written by Ying Jiang and published by . This book was released on 2017 with total page 10 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the interaction between insider trading and seasoned equity offering in the context of Myers and Majluf (1984). Private information conveyed through trading activities may mitigate information asymmetry and improve capital market efficiency. Moreover, an insider has less incentive to hide information from the market as it may be revealed through the firm's financing decision.
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.
Author :Craig G. (Craig Gordon) Dunbar Publisher :London : Richard Ivey School of Business, University of Western Ontario ISBN 13 :9780771421631 Total Pages :23 pages Book Rating :4.4/5 (216 download)
Book Synopsis Long-run Performance and Insider Trading in Completed Vs. Cancel[l]ed Seasoned Equity Offerings by : Craig G. (Craig Gordon) Dunbar
Download or read book Long-run Performance and Insider Trading in Completed Vs. Cancel[l]ed Seasoned Equity Offerings written by Craig G. (Craig Gordon) Dunbar and published by London : Richard Ivey School of Business, University of Western Ontario. This book was released on 1999 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Information Content of Registered Insider Trading Under Lax Law Enforcement by : Tomasz Piotr Wisniewski
Download or read book The Information Content of Registered Insider Trading Under Lax Law Enforcement written by Tomasz Piotr Wisniewski and published by . This book was released on 2002 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Does Insider Trading Have Information Content in the Bond Market? by : Sudip Datta
Download or read book Does Insider Trading Have Information Content in the Bond Market? written by Sudip Datta and published by . This book was released on 2001 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The study is the first to document that there is significant information content in stock trading by registered corporate insiders for the bond market. We report significant positive price reactions for convertible and straight bonds in response to the Wall Street Journal's Insider Trading Spotlight publication of insider buy transactions and significant negative reactions for insider sell transactions. The stock market response to the publication of the insider transactions, although weaker than bond market reaction, is also found to be significant suggest that bond market participants extract the quality of the insider trading signal by observing factors, such as the dollar volume of the trade, the percentage change in the holding of the insider, and the insider's position in the firm. Lower- rated (riskier) bonds are found to be more sensitive to the information than higher-rated issues. The empirical evidence presented in the paper suggest that the absence of any reporting requirement for insider bond transactions may create an enhanced opportunity for the insiders to exploit private information to expropriate wealth from uninformed bond traders. (Recently, the Wall Street Journal carried an article about this paper on February 8, 1995 on page C1.).
Book Synopsis Handbook of Corporate Finance by : Bjørn Espen Eckbo
Download or read book Handbook of Corporate Finance written by Bjørn Espen Eckbo and published by Elsevier. This book was released on 2007-05-21 with total page 559 pages. Available in PDF, EPUB and Kindle. Book excerpt: Judging by the sheer number of papers reviewed in this Handbook, the empirical analysis of firms' financing and investment decisions—empirical corporate finance—has become a dominant field in financial economics. The growing interest in everything "corporate is fueled by a healthy combination of fundamental theoretical developments and recent widespread access to large transactional data bases. A less scientific—but nevertheless important—source of inspiration is a growing awareness of the important social implications of corporate behavior and governance. This Handbook takes stock of the main empirical findings to date across an unprecedented spectrum of corporate finance issues, ranging from econometric methodology, to raising capital and capital structure choice, and to managerial incentives and corporate investment behavior. The surveys are written by leading empirical researchers that remain active in their respective areas of interest. With few exceptions, the writing style makes the chapters accessible to industry practitioners. For doctoral students and seasoned academics, the surveys offer dense roadmaps into the empirical research landscape and provide suggestions for future work.*The Handbooks in Finance series offers a broad group of outstanding volumes in various areas of finance*Each individual volume in the series should present an accurate self-contained survey of a sub-field of finance*The series is international in scope with contributions from field leaders the world over
Book Synopsis Underwriting Services and the New Issues Market by : George J. Papaioannou
Download or read book Underwriting Services and the New Issues Market written by George J. Papaioannou and published by Academic Press. This book was released on 2017-07-27 with total page 334 pages. Available in PDF, EPUB and Kindle. Book excerpt: Underwriting Services and the New Issues Market integrates practice, theory and evidence from the global underwriting industry to present a comprehensive description and analysis of underwriting practices. After covering the regulation and mechanics of the underwriting process, it considers economic topics such as underwriting costs and compensation, the pricing of new issues, the stock price and operating performance of issuing firms, the evaluation of new issue decisions, and an analysis of the many choices issuers face in structuring new issues. Unlike other books, it systematically develops a critical perspective about underwriting practices, both in the U.S. and international markets, and with a level of detail unavailable elsewhere and an approach that reveals how financial institutions deliver underwriting services. Underwriting Services and the New Issues Market delivers an innovative and long overdue look at security issuance. Foreword by Frank Fabozzi - Covers underwriting contracts and arrangements on pricing and costs - Focuses on the financial consequences of the issuance decision for the firm - Describes and evaluates decisions regarding the features and structure of new security offerings.
Book Synopsis Research Handbook on Insider Trading by : Stephen M. Bainbridge
Download or read book Research Handbook on Insider Trading written by Stephen M. Bainbridge and published by Edward Elgar Publishing. This book was released on 2013-01-01 with total page 498 pages. Available in PDF, EPUB and Kindle. Book excerpt: In most capital markets, insider trading is the most common violation of securities law. It is also the most well known, inspiring countless movie plots and attracting scholars with a broad range of backgrounds and interests, from pure legal doctrine to empirical analysis to complex economic theory. This volume brings together original cutting-edge research in these and other areas written by leading experts in insider trading law and economics. The Handbook begins with a section devoted to legal issues surrounding the USÕs ban on insider trading, which is one of the oldest and most energetically enforced in the world. Using this section as a foundation, contributors go on to discuss several specific court cases as well as important developments in empirical research on the subject. The Handbook concludes with a section devoted to international perspectives, providing insight into insider trading laws in China, Japan, Australia, New Zealand, the United Kingdom and the European Union. This timely and comprehensive volume will appeal to students and professors of law and economics, as well as scholars, researchers and practitioners with an interest in insider trading.
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