Abstract

http://ssrn.com/abstract=2023983
 


 



Do Managers Put Their Money Where Their Mouths Are? Evidence from Insider Trading after Conference Calls


Paul Brockman


Lehigh University

Xu Li


Lehigh University - Department of Accounting

S. McKay Price


Lehigh University - Perella Department of Finance

March 15, 2012


Abstract:     
We examine the relation between the tone of conference calls presented by company executives and their subsequent insider trading behavior. Our findings reveal a significant discrepancy between word and deed – simply stated, managers do not put their money where their mouths are. We find that positive conference call tones predict net insider selling, and negative conference call tones predict net insider buying. We also show that these inverse tone-trading patterns are unlikely to be the consequence of contrarian trading strategies on the part of insiders. Additional tests reveal a stronger inverse relation in CEO trading patterns, the executives most responsible for setting conference call tones, than in non-CEO trading patterns. We also find a much stronger inverse relation for small firms than for large firms, consistent with the expectation that manipulating conference call tone will be more effective in a weaker information environment.

Number of Pages in PDF File: 44

Keywords: Insider trading, Conference calls, Textual analysis, Presentation tone

JEL Classification: G02, G14, M14

working papers series


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Date posted: March 20, 2012 ; Last revised: May 16, 2012

Suggested Citation

Brockman, Paul and Li, Xu and Price, S. McKay, Do Managers Put Their Money Where Their Mouths Are? Evidence from Insider Trading after Conference Calls (March 15, 2012). Available at SSRN: http://ssrn.com/abstract=2023983 or http://dx.doi.org/10.2139/ssrn.2023983

Contact Information

Paul Brockman (Contact Author)
Lehigh University ( email )
Bethlehem, PA 18015
United States
Xu Li
Lehigh University - Department of Accounting ( email )
United States
S. McKay Price
Lehigh University - Perella Department of Finance ( email )
621 Taylor Street
Bethlehem, PA 18015
United States
610-758-4787 (Phone)
HOME PAGE: http://www.mckayprice.com
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