Network Centrality and Managerial Market Timing Ability

Joel Peress, Theodoros Evgeniou, Theo Vermaelen and Ling Yue

No 15240, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We document that long-run excess returns following announcements of share buyback authorizations and insider purchases are a U-shape function of firm centrality in the input-output trade flow network. These results conform to a model of investors endowed with a large but finite capacity for analyzing firms. Additional links weaken insiders’ informational advantage in peripheral firms (simple firms whose cash flows depend on few economic links) provided investors’ capacity is large enough, but eventually amplify that advantage in central firms (firms with many links) due to investors’ limited capacity. These findings shed light on the sources of managerial market timing ability.

Keywords: Buybacks; Market timing; Network centrality; Insider trading; Market efficiency (search for similar items in EconPapers)
JEL-codes: G32 O32 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-bec and nep-net
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Journal Article: Network Centrality and Managerial Market-Timing Ability (2022)
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