Managers and Investor Sentiment
41 Pages Posted: 20 Apr 2013
Date Written: January 24, 2013
Abstract
We examine the relation between managerial trading and market sentiment. We investigate whether managers' trades are associated with changes in market sentiment, and we find they are negatively related. We then explore cross-sectional differences in managerial trading and find trading against sentiment is strongest in firms that are difficult-to-value, such as small firms and loss firms. Our results are robust to controlling for other determinants of insider trading, including insiders' tendency to be contrarian investors, wealth diversification concerns, tax-motivated selling, and CEO overconfidence.
Keywords: investor sentiment, insider trading, voluntary disclosure
JEL Classification: M10, M40, M41, G29, G30, E44
Suggested Citation: Suggested Citation
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