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Reexamination of the link between insider trading and price efficiency

Wisniewski, Tomasz P. (2004). Reexamination of the link between insider trading and price efficiency. Economic Systems, 28(2) pp. 209–228.

DOI (Digital Object Identifier) Link: https://doi.org/10.1016/j.ecosys.2004.06.003
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Abstract

This paper investigates insider trading patterns around quarterly earnings announcements of the companies listed on the Warsaw Stock Exchange. The results are generally consistent with the notion that insiders exploit their foreknowledge of accounting disclosures but cease trading aggressively immediately before the publication date. Their informed trading is shifted to an earlier period in order to make it less explicit and minimize the danger of possible legal action. Furthermore, insider dealing has been shown to have a negligible net effect on stock price efficiency, as the benefits of information transmission are likely to be counterbalanced by the reduction in information acquisition by outsiders. In particular, it has been shown that the market professionals are reluctant to follow companies in which insiders trade actively.

Item Type: Journal Item
Copyright Holders: 2004 Elsevier
ISSN: 0939-3625
Keywords: Insider trading; Price efficiency; Earnings announcements; Analyst following
Academic Unit/School: Faculty of Business and Law (FBL) > Business > Department for Accounting and Finance
Faculty of Business and Law (FBL) > Business
Faculty of Business and Law (FBL)
Item ID: 55399
Depositing User: Tomasz Wisniewski
Date Deposited: 11 Jun 2018 12:29
Last Modified: 09 Dec 2018 00:23
URI: http://oro.open.ac.uk/id/eprint/55399
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