ABSTRACT
This paper finds that firms announcing a common stock offering experience more negative price reactions with pre-announcement insider net-sell activity than with pre-announcement insider net-buy activity. These results suggest that insider trading may be viewed as an "additional" signal related to the common-stock offering. In the cross-sectional regression analysis, it is also found that the insider trading seems to be the most important discriminator among the variables for issue size, the changes in insider ownership, the changes in financial leverage, and firm size to explain the stock price reduction at the announcement of the stock offering.
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