Strategic Disclosure Timing and Insider Trading

54 Pages Posted: 21 May 2014 Last revised: 16 Mar 2015

See all articles by Marina Niessner

Marina Niessner

University of Pennsylvania - The Wharton School

Date Written: February 26, 2015


I provide evidence that managers strategically manipulate their company’s information environment to extract private benefits. Exploiting an SEC requirement that managers disclose certain material corporate events within five business days, I show that managers systematically disclose negative events when investors are more distracted, causing returns to under-react for approximately three weeks. Strategic disclosure tim- ing is concentrated among smaller firms with high retail-investor ownership and low analyst coverage. Furthermore, I use the fact that most insider sales are scheduled in advance to demonstrate that top managers are more than twice as likely to strategically time disclosures if the return under-reaction benefits their insider sales. Finally, I find that firms that systematically disclose negative news on Fridays have higher levels of earnings management.

JEL Classification: G3

Suggested Citation

Niessner, Marina, Strategic Disclosure Timing and Insider Trading (February 26, 2015). Available at SSRN: or

Marina Niessner (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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