Insider Investment Horizon

96 Pages Posted: 17 Mar 2017 Last revised: 8 May 2018

See all articles by Ferhat Akbas

Ferhat Akbas

University of Illinois at Chicago - College of Business Administration

Chao Jiang

University of South Carolina - Department of Finance

Paul D. Koch

Iowa State University - Finance Department; Iowa State University - Finance Department

Date Written: May 2, 2018

Abstract

We examine the relation between the investment horizons of insiders and the information content of their trading activity regarding future stock returns. We conjecture that an insider’s investment horizon establishes a benchmark for expected patterns of continued trading behavior, and thus helps to identify unexpected insider trades, which should be more informative in efficient markets. Consistent with this conjecture, the trades of short horizon insiders are both more unexpected and more informed than those of long horizon insiders, on average. Short horizon insiders and their firms also tend to display attributes that are associated with a greater focus on short-termism.

Keywords: Insider trading, investment horizon, unexpected insider trades, information asymmetry, short-termism

JEL Classification: G12, G14, G18

Suggested Citation

Akbas, Ferhat and Jiang, Chao and Koch, Paul D., Insider Investment Horizon (May 2, 2018). Journal of Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2934007 or http://dx.doi.org/10.2139/ssrn.2934007

Ferhat Akbas

University of Illinois at Chicago - College of Business Administration ( email )

601 South Morgan Street
11th Floor
Chicago, IL 60607
United States

Chao Jiang (Contact Author)

University of South Carolina - Department of Finance ( email )

1014 Greene Street
Columbia, SC 29208
United States

Paul D. Koch

Iowa State University - Finance Department

Ivy College of Business
Ames, IA 50011
United States
5152942491 (Phone)

HOME PAGE: http://https://www.business.iastate.edu/directory/pkoch/

Iowa State University - Finance Department

Ames, IA 50011-2063
United States
5152942491 (Phone)

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