What do insiders know? Evidence from insider trading around share repurchases and SEOs

Peter Cziraki, Evgeny Lyandres*, Roni Michaely

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

We examine the nature of information contained in insider trades prior to corporate events. Insiders' net buying increases before open market share repurchase announcements and decreases before seasoned equity offers. Higher insider net buying is associated with better post-event operating performance, a reduction in undervaluation, and, for repurchases, lower post-event cost of capital. Insider trading also predicts announcement returns and long-term abnormal returns following events. Overall, our results suggest that insider trades before corporate events contain information about changes both in fundamentals and in investor sentiment.

Original languageEnglish
Article number101544
JournalJournal of Corporate Finance
Volume66
DOIs
StatePublished - Feb 2021

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