Annual Report Readability and Opportunistic Insider Selling—Evidence from China

Zhujia Yin, Yijie Sheng, Xinheng Liu and Xiaoguang Yang

Emerging Markets Finance and Trade, 2024, vol. 60, issue 9, 1929-1941

Abstract: Using a panel dataset of Chinese A-share listed firms during 2007–2021, we specify a fixed-effects model to examine whether and how annual report readability affects opportunistic insider selling. Our empirical findings show that lower readability of annual reports induces insiders to make more opportunistic sales. Further analysis reveals that stock overvaluation is the channel through which the readability of annual reports affects opportunistic insider sales. In addition, this effect is more pronounced among firms with less analyst coverage, higher retail concentration, and non-SOEs.

Date: 2024
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DOI: 10.1080/1540496X.2023.2295001

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