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Does high-quality corporate communication reduce insider trading profitability?

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  • Van Geyt, Debby
  • Van Cauwenberge, Philippe
  • Vander Bauwhede, Heidi
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    Abstract

    Exploring a unique database on insider trading in Belgium, we investigate whether high-quality corporate communication contributes to reducing insider trading profitability and information asymmetry. Using disclosure scores of professional financial analysts as a proxy for communication quality, we find a significant negative association between corporate communication quality and insider trading profitability. Closer inspection of different communication channels shows that the quality of annual reports, press releases and investor relation activities is more relevant in explaining insiders’ abnormal returns than the quality of corporate websites.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Review of Law and Economics.

    Volume (Year): 37 (2014)
    Issue (Month): C ()
    Pages: 1-14

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    Handle: RePEc:eee:irlaec:v:37:y:2014:i:c:p:1-14

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    Web page: http://www.elsevier.com/locate/irle

    Related research

    Keywords: Corporate governance; Disclosure; Insider trading; Information asymmetry; Event study; Belgium;

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