Two different aspects of insider trading are explored in two separate essays. / The first essay empirically tests the effectiveness of alternative mechanisms for controlling the agency costs of insider trading. Empirical research related to agency conflicts is often limited by difficulty in obtaining direct measures of agency costs. This study uses excess profits and trading volume of corporate insiders as a more direct measure of one aspect of agency cost between outside shareholders and insiders. Cross-sectional differences in the utilization of various monitoring and bonding mechanisms are examined to determine the relative effectiveness of alternative strategies. Of eight mechanisms examined, only the level of institutional ownership appears effective in reducing the agency cost related to insider trading. Additionally, this study finds, for the two-year period examined, a much lower level of abnormal profitability from insider trading than that found in most prior studies. / The second essay examines the role of corporate insiders, as informed traders, in recognizing and reacting to instances of stock price overreaction. The extent and timing of insider trading is examined around instances of potential overreaction to determine their role in facilitating price reversals. Findings from this study indicate that insiders are active traders around instances of extreme price swings in their company's stock. Their trading behavior is consistent with a contrarian strategy, but is not consistent with informed trading. Insider trading is similar for price swings that are reversed and those that do not reverse. There is no evidence of a link between the extent and direction of insider trading at the time of an extreme price change and succeeding period stock returns. / Source: Dissertation Abstracts International, Volume: 55-03, Section: A, page: 0670. / Major Professor: James S. Ang. / Thesis (Ph.D.)--The Florida State University, 1993.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_77108 |
| Contributors | Cox, Don R., Florida State University |
| Source Sets | Florida State University |
| Language | English |
| Detected Language | English |
| Type | Text |
| Format | 250 p. |
| Rights | On campus use only. |
| Relation | Dissertation Abstracts International |
Page generated in 0.0018 seconds