scholarly journals Insider Trading After Repurchase Tender Offer Announcements: Timing versus Informed Trading

2008 ◽  
Author(s):  
Henock Louis ◽  
Amy X. Sun ◽  
Hal D. White
Keyword(s):  
Insider Trading ◽  
Informed Trading ◽  
Tender Offer

Speculation or Insider Trading: Informed Trading in Options Markets Preceding Tender Offer Announcements

2000 ◽  
Author(s):  
Tom Arnold ◽  
Gayle R. Erwin ◽  
Lance A. Nail ◽  
Ted Bos
Keyword(s):  
Insider Trading ◽  
Informed Trading ◽  
Options Markets ◽  
Tender Offer

scholarly journals Insider Trading after Repurchase Tender Offer Announcements: Timing versus Informed Trading

2010 ◽  
Vol 39 (1) ◽  
pp. 301-322 ◽  
Author(s):  
Henock Louis ◽  
Amy X. Sun ◽  
Hal White
Keyword(s):  
Insider Trading ◽  
Informed Trading ◽  
Tender Offer

Bidder Incentives for Informed Trading before Hostile Tender Offer Announcements

1994 ◽  
Vol 23 (4) ◽  
pp. 57 ◽  
Author(s):  
Devra L. Golbe ◽  
Mary S. Schranz
Keyword(s):  
Informed Trading ◽  
Tender Offer

scholarly journals Do Proxies for Informed Trading Measure Informed Trading? Evidence from Illegal Insider Trades

2020 ◽  
Vol 10 (3) ◽  
pp. 397-440 ◽  
Author(s):  
Kenneth R Ahern
Keyword(s):  
Insider Trading ◽  
Sampling Bias ◽  
Informed Trading ◽  
Cross Sectional ◽  
Order Imbalance ◽  
Oxford University ◽  
Insider Trades ◽  
Editorial Decision ◽  
New Evidence ◽  
Bid Ask Spreads

Abstract This paper exploits hand-collected data on illegal insider trades to provide new evidence on the ability of a host of standard measures of illiquidity to detect informed trading. Controlling for unobserved cross-sectional and time-series variation, sampling bias, and strategic timing of insider trades, I find that when information is short-lived, only absolute order imbalance and effective spread are statistically and economically robust predictors of illegal insider trading. However, when information is long-lasting, insiders strategically time their trades to avoid illiquidity, and none of the standard measures considered are reliable predictors, including bid-ask spreads, order imbalance, Kyle’s λ, and Amihud illiquidity. (JEL D53D82G12G14K42) Received: March 14, 2019; Editorial decision: February 18, 2020 by Editor Thierry Foucault. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

scholarly journals A probabilidade de negociação com informação privilegiada no mercado acionário brasileiro

2013 ◽  
Vol 11 (2) ◽  
pp. 249
Author(s):  
Orleans Silva Martins ◽  
Edilson Paulo
Keyword(s):  
Corporate Governance ◽  
Information Asymmetry ◽  
Insider Trading ◽  
Voting Rights ◽  
Informed Trading ◽  
Common Stocks ◽  
Level 1 ◽  
Probability Of Informed Trading ◽  
The Relationship ◽  
Level 2

This paper aims to investigate the existence of insider trading in the Brazilian stock market. For this, we estimate the probability of informed trading (PIN) of 229 stocks during the years 2010 and 2011, using the model of Easley <i>et al.</i> (2002). In the results, it was found that the average PIN of these stocks was 24.9%, suggesting the existence of informed trading in that period. Considering the segment of corporate governance, the stocks listed on Level 2 had the lowest average PIN (24.4%), while stocks on Level 1 had the highest average (25.6%). Considering the classes of stock, the average PIN of common stocks was 24.2% and the average PIN of preferred stocks was 26.0%, indicating that the stocks with voting rights had lower information asymmetry. Still, it was found that the relationship between greater and lesser liquidity PIN was only confirmed for common stocks with high liquidity.

Informed Options Trading Prior to Takeover Announcements: Insider Trading?

2019 ◽  
Vol 65 (12) ◽  
pp. 5697-5720 ◽  
Author(s):  
Patrick Augustin ◽  
Menachem Brenner ◽  
Marti G. Subrahmanyam
Keyword(s):  
Stock Market ◽  
Insider Trading ◽  
Informed Trading ◽  
Securities And Exchange Commission ◽  
Equity Options ◽  
Corporate Insiders ◽  
Beneficial Ownership ◽  
Options Trading ◽  
Option Volume ◽  
The U.S

We quantify the pervasiveness of informed trading activity in target companies’ equity options before the announcements of 1,859 U.S. takeovers between 1996 and 2012. About 25% of all takeovers have positive abnormal volumes, which are greater for short-dated, out-of-the-money calls, consistent with bullish directional trading before the announcement. Over half of this abnormal activity is unlikely due to speculation, news and rumors, trading by corporate insiders, leakage in the stock market, deal predictability, or beneficial ownership filings by activist investors. We also examine the characteristics of option trades litigated by the Securities and Exchange Commission (SEC) for alleged illegal insider trading. Although the characteristics of such trades closely resemble the patterns of abnormal option volume in the U.S. takeover sample, we find that the SEC litigates only about 8% of all deals in it. This paper was accepted by Lauren Cohen, finance.

Shadow Trading

2020 ◽  
Author(s):  
Mihir N. Mehta ◽  
David Reeb ◽  
Wanli Zhao
Keyword(s):  
Insider Trading ◽  
Private Information ◽  
Informed Trading ◽  
Regulatory Enforcement ◽  
Business Partners ◽  
High Profile ◽  
Corporate Insiders ◽  
Regulatory Scrutiny ◽  
Trading Restrictions ◽  
Rule Out

We investigate whether corporate insiders attempt to circumvent insider trading restrictions by using their private information to facilitate trading in economically-linked firms, a phenomenon we call "shadow trading." Using measures of informed trading to proxy for shadow trading, we find increased levels of informed trading among business partners and competitors before a firm releases private information. To rule out alternative explanations, we examine two shocks to insiders' incentives to engage in shadow trading: high-profile regulatory enforcement against conventional insider trading and staggered changes to their outside employment opportunities. Finally, we document attenuated levels of informed trading among business partners and competitors when firms prohibit shadow trading. Overall, we provide evidence that shadow trading is an undocumented and widespread mechanism that insiders use to avoid regulatory scrutiny.

Informed Trading and the Market Reaction to Accounting Restatements

2011 ◽  
Vol 86 (5) ◽  
pp. 1519-1547 ◽  
Author(s):  
Brad A Badertscher ◽  
S. Paul Hribar ◽  
Nicole Thorne Jenkins
Keyword(s):  
Insider Trading ◽  
Market Reaction ◽  
Informed Trading ◽  
Data Availability ◽  
Stock Repurchases ◽  
Reverse Causality ◽  
Accounting Restatements ◽  
Market Reactions ◽  
Trading Activities ◽  
The Difference

ABSTRACT We examine how informed trading activities affect the market reaction to accounting restatements. We find significantly less negative reactions to accounting restatements when managers are net purchasers of stock before the restatement, and significantly more negative market reactions when managers are net sellers. Similar patterns characterize corporate trading, where prior stock repurchases dampen negative reactions and prior equity issuances increase negative reactions to the restatement. We address the possibility of reverse causality in which informed trades are undertaken because of the expected market reaction by examining the difference between disclosed and non-disclosed trades, finding that the market reaction is concentrated in the disclosed trades. Our results are incremental to general return patterns associated with insider trading and corporate equity transactions, and hold after controlling for other determinants of the market reaction to restatements. Taken together, these findings suggest that investors use informed trading activities to help interpret and price accounting restatements. JEL Classifications: M41, M42. Data Availability: Data are publicly available from the sources identified in the study.

Do Financial Analysts Restrain Insiders’ Informational Advantage?

2018 ◽  
Vol 53 (1) ◽  
pp. 203-241 ◽  
Author(s):  
Andrew Ellul ◽  
Marios Panayides
Keyword(s):  
Insider Trading ◽  
Financial Analysts ◽  
Informed Trading ◽  
Information Environment ◽  
Market Quality ◽  
Sensitive Information ◽  
Negative Effects ◽  
Insider Trades ◽  
The Impact ◽  
Informational Advantage

By collecting and disseminating price-sensitive information, financial analysts should reduce firm insiders’ informational advantage with a consequent impact on trading dynamics and market quality. We empirically examine the impact of complete analysts’ coverage termination on stocks’ liquidity, price discovery, and insider trading profitability. Termination leads to deteriorating liquidity and price efficiency, more informed trading, and higher profitability of insider trades. The magnitude of these effects depends on the strength of insiders’ ownership and on management’s decision whether to improve the firm’s information environment after coverage termination. Institutional investors alleviate, but do not eliminate, the negative effects of termination.

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