Abstract

http://ssrn.com/abstract=1754727
 
 

References (38)



 
 

Citations (28)



 


 



Insider Trading and the Long-Run Performance of New Security Issues


Kathleen M. Kahle


University of Arizona - Department of Finance

February 3, 2011

Journal of Corporate Finance, Vol. 6, No. 1, 2000

Abstract:     
This paper uses insider trading around new security issues to provide evidence of managerial timing ability. I show that insider sales increase and purchases decrease prior to issues of information-sensitive securities (convertible debt and equity) by industrial firms. I then examine the relation between insider trading and subsequent stock returns. Although not all equity issues are motivated by overvaluation, those where managers sell prior to the issue are more likely to be. I find that industrial firms with abnormal insider selling underperform in the long run, whereas those with abnormal buying do not. There is no evidence of a relation between abnormal selling and future performance for utility offerings, however. Overall, the evidence is consistent with poor long-term performance being due to overvaluation.

Number of Pages in PDF File: 39

Keywords: Insider Trading, Long-Run Stock Performance, New Security Issues, SEOs

JEL Classification: G32

Accepted Paper Series





Download This Paper

Date posted: February 4, 2011  

Suggested Citation

Kahle, Kathleen M., Insider Trading and the Long-Run Performance of New Security Issues (February 3, 2011). Journal of Corporate Finance, Vol. 6, No. 1, 2000. Available at SSRN: http://ssrn.com/abstract=1754727

Contact Information

Kathleen M. Kahle (Contact Author)
University of Arizona - Department of Finance ( email )
McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-7489 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 676
Downloads: 289
Download Rank: 61,220
References:  38
Citations:  28

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.469 seconds