Insider Profitability and Public Information: Evidence From the XBRL Mandate

41 Pages Posted: 2 Oct 2019

See all articles by Yuyun Huang

Yuyun Huang

The University of Western Australia

Yuan George Shan

The University of Western Australia - UWA Business School

Joey (Wenling) Yang

The University of Western Australia

Date Written: September 17, 2019

Abstract

Using XBRL as a quasi-natural experiment, we examine the extent to which insiders profit from publicly available information. We find that the XBRL adoption attenuates insider sale profits and has no effect on insider purchases. Further analyses reveal three channels through which the adoption of XBRL attenuates insider profits: faster information incorporation, less reporting opacity, and more financial disclosure. Our results are robust to a battery of additional tests including different insider types, varied investment horizons, the regression discontinuity design, the matched sample difference-in-difference, and the placebo tests.

Keywords: XBRL, insider trading, information processing costs, public information

JEL Classification: G14, M48

Suggested Citation

Huang, Yuyun and Shan, Yuan George and Yang, Joey (Wenling), Insider Profitability and Public Information: Evidence From the XBRL Mandate (September 17, 2019). Available at SSRN: https://ssrn.com/abstract=3455105 or http://dx.doi.org/10.2139/ssrn.3455105

Yuyun Huang

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia

Yuan George Shan

The University of Western Australia - UWA Business School ( email )

Crawley, Western Australia 6009
Australia

Joey (Wenling) Yang (Contact Author)

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
AUSTRALIA

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