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The Exploitation of Inside Information at the Wall Street Journal: A Test of Strong Form Efficiency


  • Syed, Azmat A
  • Liu, Pu
  • Smith, Stanley D


This study examines if tradings on stocks based on the inside information about the "Heard on the Street" column of the Wall Street Journal could generate abnormal returns. The authors found significant abnormal returns on days t = -1 and t = 0 (publication date) for the stocks related to insider trading. For a comparable control group of non-insider-traded stocks, the abnormal returns were not significant on day t = -1, but were significant on day t = 0. The abnormal returns for the insider trade group on days t = -1 and t = 0 were greater than the returns for the control group. The results indicate that the inside information was the cause for the differences. Copyright 1989 by MIT Press.

Suggested Citation

  • Syed, Azmat A & Liu, Pu & Smith, Stanley D, 1989. "The Exploitation of Inside Information at the Wall Street Journal: A Test of Strong Form Efficiency," The Financial Review, Eastern Finance Association, vol. 24(4), pages 567-579, November.
  • Handle: RePEc:bla:finrev:v:24:y:1989:i:4:p:567-79

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    Cited by:

    1. Tung, Y. Alex & Marsden, James R., 1998. "Test of market efficiencies using experimental electronic markets," Journal of Business Research, Elsevier, vol. 41(2), pages 145-151, February.
    2. Kiymaz, Halil, 2001. "The effects of stock market rumors on stock prices: evidence from an emerging market," Journal of Multinational Financial Management, Elsevier, vol. 11(1), pages 105-115, February.
    3. Enrico Maria Cervellati & Riccardo Ferretti & Pierpaolo Pattitoni, 2011. "Market Reaction to Second-Hand News: Attention Grabbing or Information Dissemination," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 0024, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    4. Ferreira, Eurico J. & Smith, Stanley D., 1999. "Stock price reactions to recommendations in the Wall Street Journal "Small Stock Focus" column," The Quarterly Review of Economics and Finance, Elsevier, vol. 39(3), pages 379-389.
    5. repec:ibn:ibrjnl:v:11:y:2018:i:6:p:29-40 is not listed on IDEAS
    6. Zivney, Terry L. & Bertin, William J. & Torabzadeh, Khalil M., 1996. "Overreaction to takeover speculation," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(1), pages 89-115.
    7. Peri, Massimo & Vandone, Daniela & Baldi, Lucia, 2014. "Internet, noise trading and commodity futures prices," International Review of Economics & Finance, Elsevier, vol. 33(C), pages 82-89.
    8. Albert, Robert Jr. & Smaby, Timothy R., 1996. "Market response to analyst recommendations in the "dartboard" column: the information and price-pressure effects," Review of Financial Economics, Elsevier, vol. 5(1), pages 59-74.
    9. Enrico Maria Cervellati & Riccardo Ferretti & Pierpaolo Pattitoni, 2014. "Market reaction to second-hand news: inside the attention-grabbing hypothesis," Applied Economics, Taylor & Francis Journals, vol. 46(10), pages 1108-1121, April.

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