Cancellable Insider Trading Plans: An Analysis of SEC Rule 10b5-1

• 成果类型: Article
• 署名作者: Lenkey, Stephen L.
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhz035
• 发表日期: 2019
• 页码: 4947
• 关键词: SHORT-SALES; constraints; expectations; returns

摘要

Rule 10b5-1 enables insiders to preplan future trades before becoming informed. Within a strategic rational expectations equilibrium framework, I characterize an insider's unique optimal trading plan, which balances portfolio diversification against exploitation of the rule's selective termination option. Because the rule reduces adverse selection and provides insurance against bad outcomes, the rule generally improves welfare for both the insider, who later becomes informed, and uninformed outsiders, provided there exists a sufficient degree of information asymmetry. Eliminating the rule's selective termination option results in an even greater welfare improvement under a large subset of parametric conditions.