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Insider Trading and the Classification of Seasoned Equity Offerings: Evidence from Taiwan

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  • Han-Ching Huang
  • Hsiu-Hsin Chiu

Abstract

This paper investigates whether insider purchasing or selling before Season equity offerings (SEO) announcement have the impact on the cumulative abnormal returns (CAR) around SEO announcement in Taiwan. We find that there are negative announcement effects around the SEO announcement, which is not consistent with the argument that there are usually positive announcement effects around the SEO announcement in Taiwan. Moreover, long-run abnormal returns following SEOs are negative. Therefore, the motivation of SEO has changed from investment to overvaluation. Although there is net buying prior to SEO announcement, the outside investors still regard SEO announcement as a signal of overvaluation instead of growth potential.

Suggested Citation

  • Han-Ching Huang & Hsiu-Hsin Chiu, 2017. "Insider Trading and the Classification of Seasoned Equity Offerings: Evidence from Taiwan," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(5), pages 58-70, May.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:5:p:58-70
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    References listed on IDEAS

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    More about this item

    Keywords

    seasoned equity offering (SEO); insider trading; cumulative abnormal returns (CAR);
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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