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Which type of insider transaction is more perceived as a signal by the market?

Author

Listed:
  • Tania Morris
  • Hamadou Boubacar

Abstract

Using a Canadian dataset, we examine the market reaction to insider transactions to discover if the market reacts with greater certainty to specific types of insider trades. Our results suggest that the market reacts mostly to trades carried out by directors or senior officers of the insider company or the subsidiary of the issuer. These results were steady for both sale and purchase transactions. Another interesting result is that, even though the market does not react to sale and purchase transactions by directors, it reacts to purchases by directors if the director is also an administrator of the issuer. Finally, the transaction size only matters if it is a purchase transaction.

Suggested Citation

  • Tania Morris & Hamadou Boubacar, 2013. "Which type of insider transaction is more perceived as a signal by the market?," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 4(4), pages 372-390.
    • Handle: RePEc:ids:ijcgov:v:4:y:2013:i:4:p:372-390
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