Opportunism as a firm and managerial trait: Predicting insider trading profits and misconduct

• 成果类型: Article
• 署名作者: Ali, Usman; Hirshleifer, David
• 署名单位: University of California System; University of California Irvine
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.09.002
• 发表日期: 2017
• 页码: 490-515
• 关键词: Insider trading; Opportunistic behavior; Firm and insider misconduct

摘要

We show that opportunistic insiders can be identified through the profitability of their trades prior to quarterly earnings announcements (QEAs) and that opportunistic trading is associated with various kinds of firm or managerial misconduct. A value-weighted trading strategy based on (not necessarily pre-QEA) trades of opportunistic insiders earns monthly four-factor alphas of over 1%, which is much higher than in past insider trading literature and substantial and significant even on the short side. Firms with opportunistic insiders have higher levels of earnings management, restatements, US Securities and Exchange Commission enforcement actions, shareholder litigation, and executive compensation. These findings suggest that opportunism is a domain-general trait. (C) 2017 Elsevier B.V. All rights reserved.