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Strategic insider trading around earnings announcements in Australia

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  • Dean Katselas

Abstract

This paper tests, within the Australian setting, whether directors strategically time trades in their own firms, around earnings announcements, in the context of impediments to trading in the immediately preceding period. I show that both signed and unsigned trade activity are insignificantly different from zero in the preceding period, and significantly negative and positive after the event. Further, directors in Australia significantly sell following positive earnings news, and buy after negative news, providing evidence of ‘indirect’ trading. Directors’ trades in the longer‐term pre‐announcement period are also negatively related to the news content sentiment, contrary to expectation. Finally, I find evidence of positive autocorrelation between directors’ trades over the longer‐term past, and those executed after earnings announcements, which, in the absence of the ‘short‐swing’ rule in Australia, casts doubt over short‐term strategic insider trading, more generally.

Suggested Citation

  • Dean Katselas, 2020. "Strategic insider trading around earnings announcements in Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 3709-3741, December.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:4:p:3709-3741
    DOI: 10.1111/acfi.12478
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