THE EFFECTS OF THE INSIDER TRADING SANCTIONS ACT OF 1984: THE CASE OF SEASONED EQUITY OFFERINGS

1993 ◽  
Vol 16 (2) ◽  
pp. 161-170 ◽  
Author(s):  
Thomas H. Eyssell ◽  
James P. Reburn
Keyword(s):  
Insider Trading ◽  
Seasoned Equity Offerings ◽  
Equity Offerings

scholarly journals Insider Trading and the Classification of Seasoned Equity Offerings: Evidence from Taiwan

2017 ◽  
Vol 9 (5) ◽  
pp. 58 ◽  
Author(s):  
Han-Ching Huang ◽  
Hsiu-Hsin Chiu
Keyword(s):  
Insider Trading ◽  
Abnormal Returns ◽  
Seasoned Equity Offerings ◽  
Growth Potential ◽  
Equity Offerings ◽  
Announcement Effects ◽  
Cumulative Abnormal Returns ◽  
Long Run ◽  
The Impact

This paper investigates whether insider purchasing or selling before Season equity offerings (SEO) announcement have the impact on the cumulative abnormal returns (CAR) around SEO announcement in Taiwan. We find that there are negative announcement effects around the SEO announcement, which is not consistent with the argument that there are usually positive announcement effects around the SEO announcement in Taiwan. Moreover, long-run abnormal returns following SEOs are negative. Therefore, the motivation of SEO has changed from investment to overvaluation.. Although there is net buying prior to SEO announcement, the outside investors still regard SEO announcement as a signal of overvaluation instead of growth potential.

scholarly journals Insider trading by directors and seniors officers before seasoned equity offerings

2009 ◽  
Vol 7 (2) ◽  
pp. 358-366
Author(s):  
Loretta Baryeh ◽  
Peter DaDalt ◽  
Varda Yaari
Keyword(s):  
Earnings Management ◽  
Insider Trading ◽  
Selection Criteria ◽  
Seasoned Equity Offerings ◽  
The Other ◽  
Opportunistic Behavior ◽  
Equity Offerings ◽  
Positive Signal ◽  
Management Activity ◽  
Senior Officers

An important aspect of corporate governance is how directors discharge their duty to shareholders as monitors of management’s opportunistic behavior. The insider trading by officers and directors before seasoned equity offerings (SEO) provide an opportunity to examine this issue, because insiders’ sales of the firm’s stock are incongruent with the objective of the firm to maximize the proceeds of the SEO. Since the market is aware that firms attempt to inflate their proceeds by managing earnings upwards, these trades may signal that the stock is overvalued. In this study, we compare the earnings management activity and the corresponding market response to earnings management and sales by senior officers and directors. We study a sample of 233 firms that conducted SEOs in the 1987-2004 period and either their directors and/or their senior officers traded in the firm’s shares. We find that 15% have insider trading by directors only, and 85% by both directors and senior officers. The market discounts the insider trading at the issuance date (the discount increases in the volume of insiders sales), but it treats insider trading by directors as a favorable signal that reduces the discount. Our study then identifies two ways directors monitor opportunistic insider trading before SEO. One is to ban it, as evident by the fact that under our selection criteria, 791 firms conducted SEOs in the 1987-2004 period. The other is to trade too as a positive signal to the market.

scholarly journals Insider Trading and Institutional Holdings in Seasoned Equity Offerings

2018 ◽  
Vol 11 (3) ◽  
pp. 53 ◽  
Author(s):  
Ching-Chih Wu ◽  
Tung-Hsiao Yang
Keyword(s):  
Insider Trading ◽  
Institutional Investors ◽  
Explanatory Power ◽  
Spillover Effects ◽  
Seasoned Equity Offerings ◽  
Trading Behavior ◽  
Equity Offerings ◽  
Institutional Holdings ◽  
Insider Trades ◽  
The Impact

We investigate three issues about the impact of insider trades and institutional holdings on seasoned equity offerings (SEOs). First, we test how insider trades affect the trading behavior of institutional investors in SEOs. Second, we test whose trading behavior, either insiders or institutional investors, has greater explanatory power for the performance of SEO firms after issuing new stocks. Third, we analyze the industry-wide spillover effects of insider trades and institutional holdings. Empirically, we find that insiders and institutional investors of SEO firms may utilize similar information in their transactions because insider trades induce similar trading behavior for institutional investors. In addition, insider trades, relative to institutional holdings, have greater explanatory power for SEO firm’s long-term performance. Finally, compared with insider trades, institutional holdings have a more significant spillover effect in the industry of SEO firms.

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