Sales of Secondary Shares in SEOs: A Comparison across Top Managers, Other Insiders, and Outsiders

Sinan Gokkaya and Michael J. Highfield

Financial Management, 2014, vol. 43, issue 4, 757-794

Abstract: type="main">

This paper investigates the information content of registered insider sales in the Seasoned Equity Offering (SEO) process from 1997 to 2009. We find that initial market reactions and long-run post-issue stock performance are negatively related to C-level executive insider sales, but unrelated to participation by nonexecutive insiders. We also find significantly lower post-issue abnormal earnings surprises for SEOs with C-level executive sales. Overall, the findings are consistent with the predictions of asymmetric information and agency theories.

Date: 2014
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