 Do Corporate Insiders Circumvent Insider Trading Regulations? The Case of Stock RepurchasesR Richardson Pettit, Yulong Ma and Jia He Review of Quantitative Finance and Accounting, 1996, vol. 7, issue 1, 96 pages Abstract: We use calculated values of standardized abnormal insider trading activity to investigate for patterns of unusual insider activity around fixed-price and Dutch auction repurchase announcements. Firms are classified according to whether the repurchase is signaling information about future cash flows, about the distribution of excess free cash flows, or about management's attempts to maintain control in the presence of a takeover. We find below normal levels of sales well before the event and above normal levels of sales after the event. This tendency is strongest for fixed-price offers and for firms' conveying information about future cash flows, and is absent for firms involved in takeovers. No evidence exists of abnormal levels of purchases before or after the event. We interpret the evidence as consistent with insiders successfully circumventing policies and regulations designed to prevent the exploitation of private information by timing the pattern of their security sales. Copyright 1996 by Kluwer Academic Publishers Date: 1996 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kap:rqfnac:v:7:y:1996:i:1:p:81-96 Ordering information: This journal article can be ordered from Access Statistics for this article Review of Quantitative Finance and Accounting is currently edited by Cheng-Few Lee More articles in Review of Quantitative Finance and Accounting from Springer |
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