Using detailed and unique data from Sweden, I show that former insiders trade profitably in the shares of companies with which they used to be affiliated. A trading strategy mimicking former insiders’ trading behavior yields abnormal returns of 7.6% per year. These returns are primarily driven by post-separation purchases rather than by sales. They do not reflect general stock-picking skills: former insiders earn significantly lower abnormal returns when trading in companies with which they have no affiliation. I show that former insiders’ informational advantage diminishes over time, but less so if they have ties to current insiders. The importance of such ties increases in the presence of value-relevant information. My results are consistent with former insiders benefiting from both a retained informational advantage and from inside information obtained post-separation when trading in inside stock.
| Identifer | oai:union.ndltd.org:columbia.edu/oai:academiccommons.columbia.edu:10.7916/D89G740Z |
| Date | January 2018 |
| Creators | Johannesson, Erik |
| Source Sets | Columbia University |
| Language | English |
| Detected Language | English |
| Type | Theses |
Page generated in 0.0023 seconds