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Is there information content from insider trading activities preceding earnings and dividend announcements in Hong Kong?

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  • Louis T. W. Cheng
  • T. Y. Leung

Abstract

This study examines whether insiders (directors) exploit information advantage of their firms by trading stocks before the simultaneous earnings and dividend announcements in Hong Kong. Our findings show that there are significant net‐insider‐buying activities before the announcements of good news (‘Earnings‐Dividend Increase’) and significant net‐insider‐selling activities before bad news (‘Earnings‐Dividend Decrease’ and ‘Earnings Decrease‐Dividend Zero’). In addition, our regression results provide some support for the hypothesis that there is a predictive relation between pre‐event insider trading activity and the abnormal return of the announcements.

Suggested Citation

  • Louis T. W. Cheng & T. Y. Leung, 2008. "Is there information content from insider trading activities preceding earnings and dividend announcements in Hong Kong?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 48(3), pages 417-437, September.
    • Handle: RePEc:bla:acctfi:v:48:y:2008:i:3:p:417-437
    DOI: 10.1111/j.1467-629X.2008.00258.x
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    Cited by:

    1. Cheng, Louis T.W. & Davidson III, Wallace N. & Leung, T.Y., 2011. "Insider trading returns and dividend signals," International Review of Economics & Finance, Elsevier, vol. 20(3), pages 421-429, June.
    2. Chang, Chiao-Yi, 2013. "The market response of insider transferring trades and firm characteristics in Taiwan," Emerging Markets Review, Elsevier, vol. 16(C), pages 131-144.
    3. Pérez-Rodríguez, Jorge V. & Sosvilla-Rivero, Simón & Andrada-Felix, Julián & Gómez-Déniz, Emilio, 2022. "Searching for informed traders in stock markets: The case of Banco Popular," The North American Journal of Economics and Finance, Elsevier, vol. 63(C).

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