Stealth Trading and Trade Reporting by Corporate Insiders

Forthcoming, Review of Finance

60 Pages Posted: 17 Jan 2010 Last revised: 3 Feb 2014

See all articles by André Betzer

André Betzer

BUW- Schumpeter School of Business and Economics

Jasmin Gider

Tilburg University - School of Economics and Management

Daniel Metzger

Stockholm School of Economics - Department of Finance; London School of Economics & Political Science (LSE) - Financial Markets Group; Swedish House of Finance

Erik Theissen

University of Mannheim - Finance Area

Date Written: February 2014

Abstract

Regulations in the pre-Sarbanes-Oxley era allowed corporate insiders considerable flexibility in timing their trades and engaging in stealth trading, e.g., by executing several trades and reporting them jointly after the last trade. We document that even these lax reporting requirements were frequently violated and stealth trading was common. Event study abnormal returns are larger after reports of stealth trades than after reports of otherwise similar non-stealth trades. Our results imply that delayed reporting impedes the adjustment of prices to the information revealed by insider trades. They lend strong support to the more stringent reporting requirements established by the Sarbanes-Oxley Act.

Keywords: Insider trading, directors' dealings, corporate governance, market efficiency

JEL Classification: G14, G3, G32

Suggested Citation

Betzer, André and Gider, Jasmin and Metzger, Daniel and Theissen, Erik, Stealth Trading and Trade Reporting by Corporate Insiders (February 2014). Forthcoming, Review of Finance. Available at SSRN: https://ssrn.com/abstract=1537072 or http://dx.doi.org/10.2139/ssrn.1537072

André Betzer

BUW- Schumpeter School of Business and Economics ( email )

Gaußstraße 20
Wuppertal
Germany

HOME PAGE: http://finance.uni-wuppertal.de/index.php?id=1153

Jasmin Gider

Tilburg University - School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Daniel Metzger

Stockholm School of Economics - Department of Finance ( email )

SE-113 83 Stockholm
Sweden

London School of Economics & Political Science (LSE) - Financial Markets Group ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Erik Theissen (Contact Author)

University of Mannheim - Finance Area ( email )

Mannheim, 68131
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
260
Abstract Views
1,799
rank
116,527
PlumX Metrics