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Is 'Not-Trading' Informative? Evidence from Corporate Insiders' Portfolios

Some corporate insiders hold insider equity holdings in multiple companies (portfolio insiders). I hypothesize that information can be garnered not only from their trades (e.g., an insider sale of firm A on day t), but from their not-traded securities (e.g. the insider's decision not to sell firms B and C on day t). Specifically, an insider's decision not to sell (purchase) security B at the time of the sale (purchase) of security A, is a positive (negative) signal for security B, the not-sold (not-bought) security. The paper presents three major empirical findings. First, portfolio insider not-sold securities following a sale earn large risk-adjusted returns outperforming the not-purchased securities following a purchase. Second, portfolio insiders' purchases are more informative than single-firm insiders' purchases. Finally, the results suggest that abnormal returns associated with insider purchases result from markets reacting to the revelation of the insider purchase while abnormal returns associated with not-sold securities appear to result from insiders delaying sales prior to positive firm-specific events.

Identiferoai:union.ndltd.org:arizona.edu/oai:arizona.openrepository.com:10150/613156
Date January 2016
CreatorsDeVault, Luke
ContributorsSias, Richard, Kahle, Kathleen, Cederburg, Scott, Woutersen, Tiemen, Sias, Richard
PublisherThe University of Arizona.
Source SetsUniversity of Arizona
Languageen_US
Detected LanguageEnglish
Typetext, Electronic Dissertation
RightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.

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