SEC Comment Letters and Insider Sales

• 成果类型: Article
• 署名作者: Dechow, Patricia M.; Lawrence, Alastair; Ryans, James P.
• 署名单位: University of California System; University of California Berkeley
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51232
• 发表日期: 2016
• 页码: 401-439
• 关键词: economic consequences; COMPENSATION; INFORMATION; disclosure; announcements; earnings; 10-k

摘要

We document that insider trading is significantly higher than normal levels prior to the public disclosure of SEC comment letters relating to revenue recognition. Furthermore, insider trading is triple its normal level for firms with high short positions. We find a small negative return at the comment letter release date and a negative drift in returns of 1 to 5 percent over the next 50 days following the release. We also find that greater pre -disclosure sales are associated with a stronger negative drift. This evidence suggests that insiders appear to benefit from trading prior to revenue recognition comment letters. We investigate whether the delayed price reaction to comment letter releases is due to investor inattention. Consistent with this explanation, we document that comment letters are downloaded infrequently from EDGAR in the days following their public disclosure.