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Attentive insider trading

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  • Alldredge, Dallin M.
  • Cicero, David C.

Abstract

We provide evidence that some profitable insider stock selling is motivated by public information. At firms that disclose having concentrated sales relationships, insiders appear to sell their own stock profitably based on public information about their principal customers. Supplier insiders also sell more stock when public information about their customers׳ recent returns and earnings surprises suggests they will earn larger profits. These results are stronger when outside investor attention could be lower. Outside of this setting, insiders engage in a higher proportion of routine sales and their sales are less profitable. We do not find similar patterns for insider purchases.

Suggested Citation

  • Alldredge, Dallin M. & Cicero, David C., 2015. "Attentive insider trading," Journal of Financial Economics, Elsevier, vol. 115(1), pages 84-101.
    • Handle: RePEc:eee:jfinec:v:115:y:2015:i:1:p:84-101
    DOI: 10.1016/j.jfineco.2014.09.005
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    More about this item

    Keywords

    Insider trading; Investor attention; Supply chain;
    All these keywords.

    JEL classification:

    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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