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How insiders utilize their information advantages in their trading: Evidence from China

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  • Zhao, Wanlong
  • Zhang, Wei
  • Xiong, Xiong
  • Zou, Gaofeng

Abstract

The literature studying insider trading is largely silent on two aspects. The first is the seasonal features of insider trading, and the second is how the nature of information affects insider trading. We find that insider trading is relatively concentrated in the fourth quarter because of the high information advantage. Insiders make trading decisions based on their judgements of future market reactions to annual reports. We find different patterns of information advantage utilization in positive and negative news conditions. We also explore the influence of the market valuation and ownership structure on the utilization of information advantages.

Suggested Citation

  • Zhao, Wanlong & Zhang, Wei & Xiong, Xiong & Zou, Gaofeng, 2021. "How insiders utilize their information advantages in their trading: Evidence from China," Finance Research Letters, Elsevier, vol. 42(C).
    • Handle: RePEc:eee:finlet:v:42:y:2021:i:c:s1544612320316974
    DOI: 10.1016/j.frl.2020.101883
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    References listed on IDEAS

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    Cited by:

    1. Hanedar, Avni Önder & Yaldız Hanedar, Elmas & Göktan, Mehmet Gökhan, 2022. "Insider trading on Ottoman sovereign default: The Ottoman General Debt Bond at European and İstanbul financial markets," Finance Research Letters, Elsevier, vol. 47(PB).

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    More about this item

    Keywords

    Insider trading; Information advantage; Positive news; Negative news; Market reaction;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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