Journal article
THE MARKET RESPONSE TO INSIDER SALES OF RESTRICTED STOCK VERSUS UNRESTRICTED STOCK
The Journal of financial research, v 37(1), pp 99-118
01 Mar 2014
Abstract
Insiders holding both restricted and unrestricted stock must decide which type of equity to trade. We investigate the relation between this choice and the market response to insider sales. If insiders choose restricted stock, the sale must be preannounced, but if they choose unrestricted stock, the sale is disclosed after the sale occurs. Preannounced trades are less likely to reflect informed trades. Consistent with this, in the pre-Sarbanes-Oxley (SOX) period, we find a more negative market response to unrestricted stock sales than preannounced restricted stock sales. The result does not hold for our post-SOX period when reporting times were accelerated. Our results suggest researchers who examine data over the pre-SOX period should consider the effect of restricted stock sales in tests of informed insider trading.
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Details
- Title
- THE MARKET RESPONSE TO INSIDER SALES OF RESTRICTED STOCK VERSUS UNRESTRICTED STOCK
- Creators
- Laurel Franzen - Loyola Marymount UniversityXu Li - University of Hong KongOktay Urcan - London Business SchoolMark E. Vargus - Drexel UniversityXiaowei Li - Materials Science and Engineering
- Publication Details
- The Journal of financial research, v 37(1), pp 99-118
- Publisher
- Wiley
- Number of pages
- 20
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Materials Science and Engineering
- Web of Science ID
- WOS:000209713700006
- Scopus ID
- 2-s2.0-84897763899
- Other Identifier
- 991019173568904721
InCites Highlights
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance