TY - JOUR
T1 - What do insiders know? Evidence from insider trading around share repurchases and SEOs
AU - Cziraki, Peter
AU - Lyandres, Evgeny
AU - Michaely, Roni
PY - 2021/2
Y1 - 2021/2
N2 - We examine the nature of information contained in insider trades prior to corporate events. Insiders' net buying increases before open market share repurchase announcements and decreases before seasoned equity offers. Higher insider net buying is associated with better post-event operating performance, a reduction in undervaluation, and, for repurchases, lower post-event cost of capital. Insider trading also predicts announcement returns and long-term abnormal returns following events. Overall, our results suggest that insider trades before corporate events contain information about changes both in fundamentals and in investor sentiment.
AB - We examine the nature of information contained in insider trades prior to corporate events. Insiders' net buying increases before open market share repurchase announcements and decreases before seasoned equity offers. Higher insider net buying is associated with better post-event operating performance, a reduction in undervaluation, and, for repurchases, lower post-event cost of capital. Insider trading also predicts announcement returns and long-term abnormal returns following events. Overall, our results suggest that insider trades before corporate events contain information about changes both in fundamentals and in investor sentiment.
UR - http://www.scopus.com/inward/record.url?scp=85076831984&partnerID=8YFLogxK
U2 - 10.1016/j.jcorpfin.2019.101544
DO - 10.1016/j.jcorpfin.2019.101544
M3 - Article
AN - SCOPUS:85076831984
SN - 0929-1199
VL - 66
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
M1 - 101544
ER -