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The Other Insiders: Personal Trading by Brokers, Analysts, and Fund Managers

Author

Listed:
  • Henk Berkman
  • Paul Koch
  • P Joakim Westerholm
  • Jeffrey Pontiff

Abstract

When brokers, analysts, and fund managers buy or sell stocks for their own accounts, these “access employees” of financial institutions outperform retail investors over short windows up to a month. They earn particularly high abnormal returns when they trade before earnings announcements, revisions of analyst recommendations, and large stock price changes. We also find evidence consistent with profitable front-running and information leakage around the execution of corporate insider trades and block trades by mutual funds, as well as the release of revised recommendations by analysts who work at the same brokerage firm. (JEL G12, G14, G18)Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Henk Berkman & Paul Koch & P Joakim Westerholm & Jeffrey Pontiff, 2023. "The Other Insiders: Personal Trading by Brokers, Analysts, and Fund Managers," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 13(3), pages 481-522.
    • Handle: RePEc:oup:rasset:v:13:y:2023:i:3:p:481-522.
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    File URL: http://hdl.handle.net/10.1093/rapstu/raad002
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    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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