Download this Paper Open PDF in Browser

Disclosure Quality and Management Trading Incentives

54 Pages Posted: 4 Nov 2008 Last revised: 26 Oct 2011

Jonathan L. Rogers

University of Colorado at Boulder - Leeds School of Business

Date Written: April 1, 2008

Abstract

This study examines whether managers strategically alter disclosure “quality” in response to personal incentives, specifically those derived from trading on their own account. Using changes in market liquidity to proxy for disclosure quality, I find that trading incentives are associated with disclosure quality choices. Tests are performed across three disclosure samples: management forecasts, conference calls and press releases. Consistent with a desire to reduce the probability of litigation, I find evidence that managers provide higher quality disclosures before selling shares than they provide in the absence of trading. Consistent with a desire to maintain their information advantage, I find some, albeit weaker, evidence that managers provide lower quality disclosures prior to purchasing shares than they provide in the absence of trading.

Keywords: disclosure quality, liquidity, information asymmetry, insider trading

JEL Classification: M41, M45, D82, G14, G18, K22

Suggested Citation

Rogers, Jonathan L., Disclosure Quality and Management Trading Incentives (April 1, 2008). Chicago GSB Research Paper No. 08-18. Available at SSRN: https://ssrn.com/abstract=1294904

Jonathan L. Rogers (Contact Author)

University of Colorado at Boulder - Leeds School of Business ( email )

419 UCB
Boulder, CO 80309-0419
United States

Paper statistics

Downloads
666
Rank
31,585
Abstract Views
2,296