Insider trades and private information: The special case of delayed-disclosure trades

• 成果类型: Article
• 署名作者: Cheng, Shijun; Nagar, Venky; Rajan, Madhav V.
• 署名单位: University System of Maryland; University of Maryland College Park; University of Michigan System; University of Michigan; Stanford University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhm029
• 发表日期: 2007
• 页码: 1833
• 关键词: future earnings; STOCK

摘要

In certain circumstances, insider trades such as private transactions between executives and their firms could be disclosed after the end of the firms fiscal year, on a Form-5 filing. We find that insider sales disclosed in such a delayed manner for large firms are predictive of negative future returns (6 to 8 percent), as well as lower future annual earnings relative to analyst forecasts. These results stand in contrast to existing findings on the uninformativeness of quickly disclosed open-market insider sales. The Sarbanes-Oxley Act curtailed the use of Form 5 under the presumption that managers used this vehicle opportunistically. Our systematic evidence supports this presumption.