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

Author

Listed:
  • Steven Huddart

    (Pennsylvania State University)

  • Bin Ke

    (Pennsylvania State University)

  • Charles Shi

    (University of California, Irvine)

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.

Suggested Citation

  • Steven Huddart & Bin Ke & Charles Shi, 2005. "Jeopardy, non-public information, and insider trading around SEC 10-K and 10-Q filings," Law and Economics 0502001, EconWPA, revised 03 Jul 2005.
  • Handle: RePEc:wpa:wuwple:0502001
    Note: Type of Document - pdf; pages: 50
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/le/papers/0502/0502001.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    accounting standards; government regulation; insider trading; litigation risk; stock-based compensation;

    JEL classification:

    • K22 - Law and Economics - - Regulation and Business Law - - - Business 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; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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