Insider Trading Patterns
David C. Cicero
University of Alabama - Culverhouse College of Commerce & Business Administration
M. Babajide Wintoki
University of Kansas - School of Business
February 3, 2014
We analyze the information content of corporate insiders' trades after accounting for certain trading patterns. Insiders spread their trades over longer periods of time when they have a longer-lived informational advantage and when outside investors are less attentive. In contrast, they make isolated trades in short windows of time when their informational advantage is short-lived. Both isolated trades and trade sequences (those spread over multiple consecutive months) predict sizable abnormal returns; for sequences, these abnormal returns are manifest only following the completion of the sequence. The return patterns we identify continue to hold for a large group of insiders that would have been classified as "routine" traders by prior research, suggesting that informed insider trading may be even more widespread than previously thought.
Number of Pages in PDF File: 43
Keywords: insider trading, informed trading, executive trading, trade patterns
JEL Classification: G12, G14, G18working papers series
Date posted: August 12, 2012 ; Last revised: February 6, 2014
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