The credibility of voluntary disclosure and insider stock transactions

• 成果类型: Article
• 署名作者: Gu, Feng; Li, John Q.
• 署名单位: State University of New York (SUNY) System; University at Buffalo, SUNY; Suffolk University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/j.1475-679X.2007.00250.x
• 发表日期: 2007
• 页码: 771-810
• 关键词: MANAGEMENT EARNINGS FORECASTS; research-and-development; information-content; SECURITY RETURNS; PRICE BEHAVIOR; MARKET; equity; cost; COMPENSATION; equilibrium

摘要

We examine stock price reaction to voluntary disclosure of innovation strategy by high-tech firms and its relation with insider stock transactions before the disclosure. We find that, despite the qualitative and subjective nature of strategy-related disclosure, there is positive stock price reaction to the disclosure. The evidence suggests that investors view the disclosure as credible good news. We also find that the disclosure is associated with more positive stock price reaction when it is preceded by insider purchase transactions. This evidence is consistent with insider purchase enhancing the credibility of the disclosure. The credibility-enhancing effect is found to be stronger for firms with higher degrees of information asymmetry (younger firms, firms with lower analyst following, loss firms, and firms with higher research and development (R&D) intensity). Our evidence also indicates that predisclosure insider purchase is associated with greater future abnormal returns, suggesting that managers are privy to good news shortly before the disclosure.