Does high-quality corporate communication reduce insider trading profitability?

Debby Van Geyt, Philippe Van Cauwenberge and Heidi Vander Bauwhede

International Review of Law and Economics, 2014, vol. 37, issue C, 1-14

Abstract: Exploring a unique database on insider trading in Belgium, we investigate whether high-quality corporate communication contributes to reducing insider trading profitability and information asymmetry. Using disclosure scores of professional financial analysts as a proxy for communication quality, we find a significant negative association between corporate communication quality and insider trading profitability. Closer inspection of different communication channels shows that the quality of annual reports, press releases and investor relation activities is more relevant in explaining insiders’ abnormal returns than the quality of corporate websites.

Keywords: Corporate governance; Disclosure; Insider trading; Information asymmetry; Event study; Belgium (search for similar items in EconPapers)
JEL-codes: G10 G14 G34 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:37:y:2014:i:c:p:1-14

DOI: 10.1016/j.irle.2013.04.002

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