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Insider Trading, News Releases, and Ownership Concentration

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Author Info
JANA P. FIDRMUC
MARC GOERGEN
LUC RENNEBOOG

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Abstract

This paper investigates the market's reaction to U.K. insider transactions and analyzes whether the reaction depends on the firm's ownership. We present three major findings. First, differences in regulation between the U.K. and United States, in particular the speedier reporting of trades in the U.K., may explain the observed larger abnormal returns in the U.K. Second, ownership by directors and outside shareholders has an impact on the abnormal returns. Third, it is important to adjust for news released before directors' trades. In particular, trades preceded by news on mergers and acquisitions and CEO replacements contain significantly less information. Copyright 2006 by The American Finance Association.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1540-6261.2006.01008.x
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Article provided by American Finance Association in its journal The Journal of Finance.

Volume (Year): 61 (2006)
Issue (Month): 6 (December)
Pages: 2931-2973
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Handle: RePEc:bla:jfinan:v:61:y:2006:i:6:p:2931-2973

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  3. Gregory, Alan, et al, 1994. "UK Directors' Trading: The Impact of Dealings in Smaller Firms," Economic Journal, Royal Economic Society, vol. 104(422), pages 37-53, January. [Downloadable!] (restricted)
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  4. Lins, Karl & McConnell, John J. & Servaes, Henri, 2004. "Changes in Equity Ownership and Changes in the Market Value of the Firm," CEPR Discussion Papers 4411, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. André Betzer & Erik Theissen, 2009. "Insider Trading and Corporate Governance: The Case of Germany," European Financial Management, Blackwell Publishing Ltd, vol. 15(2), pages 402-429. [Downloadable!] (restricted)
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  15. Rozeff, Michael S & Zaman, Mir A, 1988. "Market Efficiency and Insider Trading: New Evidence," Journal of Business, University of Chicago Press, vol. 61(1), pages 25-44, January. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hans Degryse & Frank de Jong & Jérémie Lefebvre, 2009. "An Empirical Analysis of Legal Insider Trading in the Netherlands," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Fidrmuc, J.P. & Roosenboom, P.G.J. & Dijk, D.J.C. van, 2007. "When Do Managers Seek Private Equity Backing in Public-to-Private Transactions?," Research Paper ERS-2007-028-F&A Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  3. Goergen, M. & Renneboog, L.D.R. & Zhang, C., 2008. "Do UK Institutional Shareholders Monitor their Investee Firms?," Discussion Paper 2008-38, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  4. Andreas Zingg & Sebastian Lang & Daniela Wyttenbach, 2007. "Insider Trading in the Swiss Stock Market," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 143(III), pages 331-362, September. [Downloadable!]
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