Corporate Transactions in Hard-to-Value Stocks

Itzhak Ben-David, Byungwook Kim, Hala Moussawi and Darren T. Roulstone
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Byungwook Kim: Ohio State University
Hala Moussawi: Stanford Graduate School of Business
Darren T. Roulstone: Ohio State University

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: Hard-to-value stocks provide opportunities for managers to exploit their informational advantage through trading on their firms' and their own personal accounts. In contrast to the prediction that such transactions reflect private information about future events, they are contrarian and heavily depend on past returns. Corporate transactions in hard-to-value stocks outperform those in easy-to-value stocks in the early part of our sample, but this difference disappears after 2002, coinciding with a general decline in the profitability of stock market anomalies. Our evidence is consistent with managers' perception of mispricing, rather than private information, being a key motivator of their transactions.

JEL-codes: G12 G14 G23 G32 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-cfn, nep-cwa and nep-fmk
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Journal Article: Corporate Transactions in Hard-to-Value Stocks (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2021-16

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