Abstract

http://ssrn.com/abstract=1720808
 
 

References (31)



 
 

Citations (2)



 


 



Informed Traders: Linking Legal Insider Trading and Share Repurchases


Konan Chan


National Chengchi University (NCCU)

David L. Ikenberry


Leeds School of Business, University of Colorado Boulder; University of Illinois at Urbana-Champaign - Department of Finance

Inmoo Lee


Korea Advanced Institute of Science and Technology (KAIST)

Yanzhi Wang


Yuan Ze University - Department of Finance

December 1, 2010

KAIST Business School Working Paper Series No. 2010-014

Abstract:     
Logic suggests a link might exist between insider trades and share repurchases for their potential to signal mispricing when market prices deviate from fair value; both events emanate from essentially the same set of decision makers. A rich set of literatures suggests that executives have timing ability with respect to both events. However, several researchers view this collective evidence with suspicion and discount the notion that the evidence reflects fundamental mispricing or managerial timing. We address this debate by considering these two transactions jointly in the context of portfolios which better reflect trading in realtime and also using performance metrics commonly adopted in practice. For "value" buyback firms where mispricing is a more pragmatic economic motivation, insider trading does indeed provide a strong compliment to the repurchase signal. We find that that mispricing appears to be a key factor motivating at least some repurchase announcements and that managers do exhibit some degree of timing ability.

Number of Pages in PDF File: 34

working papers series


Download This Paper

Date posted: December 7, 2010  

Suggested Citation

Chan, Konan and Ikenberry, David L. and Lee, Inmoo and Wang, Yanzhi, Informed Traders: Linking Legal Insider Trading and Share Repurchases (December 1, 2010). KAIST Business School Working Paper Series No. 2010-014. Available at SSRN: http://ssrn.com/abstract=1720808 or http://dx.doi.org/10.2139/ssrn.1720808

Contact Information

Konan Chan
National Chengchi University (NCCU) ( email )
No. 64, Chih-Nan Road
Section 2
Taipei, 11623
Taiwan
+886-2-29393091 ext 81239 (Phone)
David L. Ikenberry (Contact Author)
Leeds School of Business, University of Colorado Boulder ( email )
Boulder, CO 80309-0419
United States
303-492-1809 (Phone)
University of Illinois at Urbana-Champaign - Department of Finance ( email )
1206 South Sixth Street
340 Wohlers Hall
Champaign, IL 61820
United States
217-333-6396 (Phone)
217-333-4101 (Fax)
Inmoo Lee
Korea Advanced Institute of Science and Technology (KAIST) ( email )
207-43 Cheongryangri-2dong 130-722
Seoul
Korea
Yanzhi Wang
Yuan Ze University - Department of Finance ( email )
135, Far-East Rd., Chung-Li
Taoyuan, ROC
Taiwan
Feedback to SSRN


Paper statistics
Abstract Views: 956
Downloads: 184
Download Rank: 95,508
References:  31
Citations:  2

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.281 seconds