Strategic Trading and Trade Reporting by Corporate Insiders

André Betzer (), Jasmin Gider (), Daniel Metzger () and Erik Theissen
Additional contact information
André Betzer: University of Wuppertal
Jasmin Gider: Graduate School of Economics, Bonn
Daniel Metzger: Stockholm School of Economics

No sdp11015, Schumpeter Discussion Papers from Universitätsbibliothek Wuppertal, University Library

Abstract: Regulations in the pre-Sarbanes–Oxley era allowed corporate insiders considerable flexibility in strategically timing their trades and SEC filings, e.g., by executing several trades and reporting them jointly after the last trade. We document that even these lax reporting requirements were frequently violated and that strategic timing of trades and reports was common. Event study abnormal returns are larger after reports of strategic trades than after reports of otherwise similar nonstrategic trades. Our results imply that delayed reporting impedes the adjustment of prices to the information revealed by insider trades. They lend strong support to the more stringent reporting requirements established by the Sarbanes–Oxley Act.

Keywords: Insider trading; directors' dealings; corporate governance; market efficiency (search for similar items in EconPapers)
JEL-codes: G14 G30 G32 (search for similar items in EconPapers)
Pages: 54
Date: 2011-11
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Related works:
Working Paper: Strategic trading and trade reporting by corporate insiders (2011)
Working Paper: Strategic trading and trade reporting by corporate insiders (2010)
Working Paper: Strategic trading and trade reporting by corporate insiders (2009)
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