Article: Insider trading and long-run return performance.(Financial Management Silver Anniversary Commemoration)

This paper provides an empirical examination of the propensity, probability, and aggregate profitability of insider transactions by managers of all NYSE- and AMEX-listed firms. Specifically, we focus on the patterns of insider trading in the marketplace prior to, during, and after long-run periods of abnormal stock market performance. With these estimates, we are able to characterize the form and nature of insider trading conditional on performance. The results help to answer questions regarding whether insiders appear to have, and make widespread use of, valuable inside information, whether substantial wealth transfers result from such investment activities, and whether ...

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