Outside directors' insider trading around board meetings

• 成果类型: Article
• 署名作者: Kim, Seil; Oh, Seungjoon
• 署名单位: City University of New York (CUNY) System; Baruch College (CUNY); Peking University; Peking University Shenzhen Graduate School (PKU Shenzhen)
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-023-09774-9
• 发表日期: 2024
• 页码: 2617-2649
• 关键词: CORPORATE-TAX AVOIDANCE; risk-factor disclosures; earnings; INFORMATION; Aggressiveness; READABILITY; valuation; POWER; cost

摘要

Using a novel dataset of US companies' regular board meeting schedules, we find evidence of informed trading by outside directors prior to board meetings. During the days prior to board meetings, when outside directors possess private information, they make more profitable and larger purchases than they do during other periods. We find no such patterns among inside directors who possess private information regardless of the timing of board meetings. We further find that the profitability of outside directors' purchases made prior to board meetings is associated with subsequent news disclosures and is realized shortly after the purchases, consistent with the opportunistic use of private board meeting information. Our findings suggest that providing private information to outside directors in preparation for board meetings-a process deemed necessary for effective board monitoring-can facilitate opportunistic insider trading.