Why do Insiders Trade? Evidence Based on Unique Data on Swedish Insiders

Journal of Accounting and Economics, Forthcoming

Posted: 2 Jul 2009

See all articles by Juha-Pekka Kallunki

Juha-Pekka Kallunki

University of Oulu - Department of Accounting and Finance

Henrik Nilsson

University of Umea

Jörgen Hellström

Umeå University - Umeå School of Business and Economics

Date Written: June 28, 2009

Abstract

In this paper, we examine if corporate insiders have other motives for trading besides exploitation of private information. Our results show that insiders’ portfolio rebalancing objectives, tax considerations and behavioral biases play the most important role in their trading decisions. We also find that insiders who have allocated a great (small) proportion of their wealth to insider stock sell more (less) before bad news earnings disclosures. Finally, insider selling is informative for future returns among those insiders who have the greatest proportion of wealth allocated to insider stocks.

Keywords: Insider trading, stock market, earnings announcements, behavioral finance

JEL Classification: M41, G10, K22

Suggested Citation

Kallunki, Juha-Pekka and Nilsson, Henrik and Hellström, Jörgen, Why do Insiders Trade? Evidence Based on Unique Data on Swedish Insiders (June 28, 2009). Journal of Accounting and Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1426899

Juha-Pekka Kallunki (Contact Author)

University of Oulu - Department of Accounting and Finance ( email )

PO Box 4600
FIN-90014
Finland
+358 8 553 2956 (Phone)
+358 8 553 2906 (Fax)

HOME PAGE: http://www.cc.oulu.fi/~jpkallun

Henrik Nilsson

University of Umea ( email )

Umea School of Business & Economics
SE-901 87 Umea
Sweden

Jörgen Hellström

Umeå University - Umeå School of Business and Economics ( email )

Umea, 90187
Sweden
+46-90-7866987 (Phone)

HOME PAGE: http://www.usbe.umu.se/english/about/staff/?languageId=1&uid=johe0001

Register to save articles to
your library

Register

Paper statistics

Abstract Views
561
PlumX Metrics