The effect of realized future growth opportunities on insider trading

Gaofeng Zou, Shuchang Du, Yulong Yang and Zuo Huang

Economics Letters, 2022, vol. 210, issue C

Abstract: This paper analyzes the effect of realized future growth opportunities on insider trading. Using intangible information decomposed by the book-to-market ratio, we find that insiders’ stock sales are significantly negatively associated with intangible information. The results suggest that intangible information provides insiders an opportunity to gain profit by means of selling stocks with high-level realized future growth opportunities in advance. Meanwhile, high information transparency of the firm will strengthen the insider’s trading based on realized future growth opportunities.

Keywords: Insider trading; Realized future growth opportunities; Intangible information; Information transparency (search for similar items in EconPapers)
JEL-codes: G1 G3 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:210:y:2022:i:c:s0165176521004286

DOI: 10.1016/j.econlet.2021.110154

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