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The role of the media in disseminating insider-trading news

Author

Listed:
  • Jonathan L. Rogers

    (University of Colorado)

  • Douglas J. Skinner

    (University of Chicago Booth School of Business)

  • Sarah L. C. Zechman

    (University of Colorado)

Abstract

We use the process through which insider trading (SEC Form 4) filings are made public to investigate whether media coverage affects the way securities markets assimilate news. To do this, we use recent changes in disclosure rules governing insider trades as well as the initiation of coverage by Dow Jones to cleanly identify media effects. Using high-resolution intraday data, we find clear effects of media dissemination on the way prices and volume respond to insider trading news in the minutes after its release. These results help to resolve open questions regarding the role of the media in capital markets, including why apparently second hand news affects securities prices.

Suggested Citation

  • Jonathan L. Rogers & Douglas J. Skinner & Sarah L. C. Zechman, 2016. "The role of the media in disseminating insider-trading news," Review of Accounting Studies, Springer, vol. 21(3), pages 711-739, September.
    • Handle: RePEc:spr:reaccs:v:21:y:2016:i:3:d:10.1007_s11142-016-9354-2
    DOI: 10.1007/s11142-016-9354-2
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    More about this item

    Keywords

    Insider trading; Disclosure; Dissemination; Media;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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