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Insider Filing Violations and Illegal Information Delay

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  • Cline, Brandon N.
  • Houston, Caleb

Abstract

We document that a significant number of insiders violate the Securities and Exchange Commission (SEC) reporting requirements by filing open market transactions after the legally required deadline. Prior to the Sarbanes–Oxley Act (SOX), 29% of transactions fell outside the required reporting window. Following SOX, 8% are delinquent. Violations cluster in periods of high information asymmetry, incentivizing insiders to keep trades private and earn abnormal returns. Collectively, these findings suggest that a subgroup of insiders personally benefit from violating SEC disclosure requirements. Evidence also suggests that blockholders provide governance for violations. Guilty insiders experience a reduction in board seats and an increased likelihood of turnover.

Suggested Citation

  • Cline, Brandon N. & Houston, Caleb, 2023. "Insider Filing Violations and Illegal Information Delay," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 58(5), pages 2262-2297, August.
    • Handle: RePEc:cup:jfinqa:v:58:y:2023:i:5:p:2262-2297_13
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