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Jeopardy, Non-Public Information, and Insider Trading Around SEC 10-K and 10-Q Filings


Steven J. Huddart


Pennsylvania State University, University Park - Department of Accounting

Bin Ke


Nanyang Technological University

Charles Shi


NUS Business School, National University of Singapore

Journal of Accounting & Economics, Forthcoming

Abstract:     
Evidence contrasting U.S. insider trades in high- and low-jeopardy periods and across firms at high and low risk for 10b-5 litigation indicates that insiders condition their trades on foreknowledge of price-relevant public disclosures, but avoid profitable trades when the jeopardy associated with such trades is high, such as immediately before earnings announcements. Insiders avoid profitable trades before quarterly earnings are announced and sell (buy) after good (bad) news earnings announcements. Insiders trade most heavily after earnings announcements and profit from foreknowledge of price-relevant information in the forthcoming Form 10-K or 10-Q filing.

Number of Pages in PDF File: 51

Keywords: accounting standards, government regulation, insider trading, litigation risk, stock-based compensation

JEL Classification: J33, K22, M12, M41

Accepted Paper Series


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Date posted: June 20, 2006  

Suggested Citation

Huddart, Steven J., Ke, Bin and Shi, Charles , Jeopardy, Non-Public Information, and Insider Trading Around SEC 10-K and 10-Q Filings. Journal of Accounting & Economics, Forthcoming. Available at SSRN: http://ssrn.com/abstract=910056 or http://dx.doi.org/10.2139/ssrn.756124

Contact Information

Steven J. Huddart (Contact Author)
Pennsylvania State University, University Park - Department of Accounting ( email )
University Park, PA 16802-3603
United States
814-865-3271 (Phone)
814-863-8393 (Fax)
HOME PAGE: http://www.personal.psu.edu/sjh11
Bin Ke
Nanyang Technological University ( email )
S3-01B-39, 50 Nanyang Avenue
Singapore, 639798
Singapore
+6567904832 (Phone)
+6567913697 (Fax)
HOME PAGE: http://www.ntu.edu.sg/home/KEBIN/
Charles Shi
NUS Business School, National University of Singapore ( email )
15 Kent Ridge Dr
Singapore, 119245
Singapore
65-65161678 (Phone)
HOME PAGE: http://bschool.nus.edu/Accounting/FacultyStaff/Facultymembers.aspx
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