Signalling Characteristics and Information Content of Directors’ Dealings on the London Stock Exchange

Journal of Risk and Governance , Vol. 1, No. 1, 2008

24 Pages Posted: 26 Nov 2010

See all articles by Mohd M. Ajlouni

Mohd M. Ajlouni

Yarmouk University

Steve Toms

University of Leeds - Leeds University Business School (LUBS); University of Leeds - Division of Accounting and Finance

Date Written: 2008

Abstract

The study investigates the information content of insider trading transactions employing different signal definitions. Using directors' open market dealings during the period 1999-2000 for FTSE100 companies and new extensions of the event study methodology, the evidence suggests directors have, and trade on, price-sensitive private information and, thus, attain short-term abnormal returns. The study finds that the market perceives such transactions as price sensitive signals. Selling signals are assimilated by the market later than buying signals but create greater market reaction, particularly when the signal is reinforced by the trades of more than one director.

Keywords: Insider Trading Event, Study Directors

JEL Classification: G14

Suggested Citation

Ajlouni, Mohd M. and Toms, Steve, Signalling Characteristics and Information Content of Directors’ Dealings on the London Stock Exchange (2008). Journal of Risk and Governance , Vol. 1, No. 1, 2008. Available at SSRN: https://ssrn.com/abstract=1714437

Mohd M. Ajlouni

Yarmouk University ( email )

Shafiq Irshidat st
Irbid, 21163
Jordan

Steve Toms (Contact Author)

University of Leeds - Leeds University Business School (LUBS) ( email )

Leeds LS2 9JT
United Kingdom

University of Leeds - Division of Accounting and Finance ( email )

Leeds LS2 9JT
United Kingdom

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