Personal Trading by Brokers, Analysts, and Fund Managers

67 Pages Posted: 8 Nov 2018

See all articles by Henk Berkman

Henk Berkman

University of Auckland - Business School

Paul Koch

Iowa State University; University of Auckland Business School; The University of Sydney

P. Joakim Westerholm

University of Sydney Business School; Financial Research Network (FIRN)

Date Written: March 31, 2018

Abstract

When brokers, analysts and fund managers buy or sell for their own account, they outperform retail investors over short windows up to a month. They earn particularly high abnormal returns when they trade simultaneously with other financial experts and when they trade before earnings announcements, revisions of analyst recommendations, and unexpected large price changes. We also find evidence consistent with front running and information leakage before the public disclosure of corporate insider trades, the execution of block trades by foreign and domestic institutions, and revisions of recommendations by analysts working at the same brokerage firm as the expert trading.

Keywords: informed trading, information asymmetry, leakage, front running, tipping, insider trades, block trades, social networks, broker, analyst, fund manager, institutional investor

JEL Classification: G12, G14, G18

Suggested Citation

Berkman, Henk and Koch, Paul and Westerholm, P. Joakim, Personal Trading by Brokers, Analysts, and Fund Managers (March 31, 2018). Available at SSRN: https://ssrn.com/abstract=3280610 or http://dx.doi.org/10.2139/ssrn.3280610

Henk Berkman

University of Auckland - Business School ( email )

Private Bag 92019
Room: 577
Auckland
New Zealand
(64 9) 3737599 Ext. 7181 (Phone)
(64 9) 3737406 (Fax)

Paul Koch (Contact Author)

Iowa State University ( email )

Ames, IA 50011-2063
United States
5152942491 (Phone)
5152943355 (Fax)

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

University of Auckland Business School ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

The University of Sydney ( email )

University of Sydney
Sydney, NC NSW 2006
Australia

P. Joakim Westerholm

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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