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Jeopardy, non-public information, and insider trading around SEC 10-K and 10-Q filings

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Author Info
Steven Huddart (Pennsylvania State University)
Bin Ke (Pennsylvania State University)
Charles Shi (University of California, Irvine)

Additional information is available for the following registered author(s):

Abstract

Evidence contrasting insider trades in the U.S. between high- and low- jeopardy periods and across firms at high and low risk for 10b-5 litigation indicates insiders condition their trades on foreknowledge of price-relevant public disclosures, but avoid profitable trades when jeopardy due to trade is high. Insiders avoid profitable trades before quarterly earnings are announced. Subsequent trades reflect foreknowledge of the forthcoming Form 10-K or 10-Q filing, which contains additional price-relevant information. Insiders appear to profit passively from earnings announcement and actively from foreknowledge of 10-K and 10-Q filings.

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File URL: http://129.3.20.41/eps/le/papers/0502/0502001.pdf
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Publisher Info
Paper provided by EconWPA in its series Law and Economics with number 0502001.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 50 pages
Date of creation: 07 Feb 2005
Date of revision: 03 Jul 2005
Handle: RePEc:wpa:wuwple:0502001

Note: Type of Document - pdf; pages: 50
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Web page: http://129.3.20.41

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Related research
Keywords: accounting standards; government regulation; insider trading; litigation risk; stock-based compensation;

Other versions of this item:

Find related papers by JEL classification:
K22 - Law and Economics - - Regulation and Business Law - - - Corporation and Securities Law
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ke, Bin & Huddart, Steven & Petroni, Kathy, 2003. "What insiders know about future earnings and how they use it: Evidence from insider trades," Journal of Accounting and Economics, Elsevier, vol. 35(3), pages 315-346, August. [Downloadable!] (restricted)
  2. Volume 23 Number 1, 1994. "Insider Trading Following Material News Events: Evidence from Earnings," Financial Management, Financial Management Association, vol. 23(1), Spring.
  3. Penman, Stephen H, 1982. "Insider Trading and the Dissemination of Firms' Forecast Information," Journal of Business, University of Chicago Press, vol. 55(4), pages 479-503, October. [Downloadable!] (restricted)
  4. Seyhun, H Nejat, 1990. "Do Bidder Managers Knowingly Pay Too Much for Target Firms?," Journal of Business, University of Chicago Press, vol. 63(4), pages 439-64, October. [Downloadable!] (restricted)
  5. Aboody, David & Kasznik, Ron, 2000. "CEO stock option awards and the timing of corporate voluntary disclosures," Journal of Accounting and Economics, Elsevier, vol. 29(1), pages 73-100, February. [Downloadable!] (restricted)
  6. Noe, Christopher F., 1999. "Voluntary disclosures and insider transactions," Journal of Accounting and Economics, Elsevier, vol. 27(3), pages 305-326, July. [Downloadable!] (restricted)
  7. Givoly, Dan & Palmon, Dan, 1985. "Insider Trading and the Exploitation of Inside Information: Some Empirical Evidence," Journal of Business, University of Chicago Press, vol. 58(1), pages 69-87, January. [Downloadable!] (restricted)
  8. Lakonishok, Josef & Lee, Inmoo, 2001. "Are Insider Trades Informative?," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 14(1), pages 79-111.
  9. Jonathan M. Karpoff & Daniel Lee, 1991. "Insider Trading Before New Issue Announcements," Financial Management, Financial Management Association, vol. 20(1), Spring.
  10. Huddart, Steven & Hughes, John S & Levine, Carolyn B, 2001. "Public Disclosure and Dissimulation of Insider Trades," Econometrica, Econometric Society, vol. 69(3), pages 665-81, May.
  11. Seyhun, H Nejat & Bradley, Michael, 1997. "Corporate Bankruptcy and Insider Trading," Journal of Business, University of Chicago Press, vol. 70(2), pages 189-216, April. [Downloadable!] (restricted)
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