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Evidence of strategic information uncertainty around opportunistic insider purchases

Dewan Rahman, Barry Oliver and Robert Faff

Journal of Banking & Finance, 2020, vol. 117, issue C

Abstract: We investigate whether CEOs strategically increase information uncertainty surrounding their insider stock purchases. We find that in the month before and during CEO stock purchases, information uncertainty in their news releases increases, which correlates with lower stock prices. This finding is not evident in the month after insider purchases and thus suggests CEOs’ strategic behavior. Our key findings of strategic information uncertainty are confirmed using multi-faceted fixed effects regressions, a quasi-natural experimental design, and numerous other robustness checks.

Keywords: Insider trading; Information uncertainty; Opportunistic CEOs (search for similar items in EconPapers)
JEL-codes: G12 G14 G34 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.jbankfin.2020.105821

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Handle: RePEc:eee:jbfina:v:117:y:2020:i:c:s0378426620300881