Insider Trading and Strategic Disclosure

32 Pages Posted: 8 Dec 2020

Date Written: December 7, 2020


I show that public companies disproportionately disclose positive news on days when corporate executives sell shares under predetermined Rule 10b5-1 plans. I find that the likelihood, share volume and dollar volume of insider sales under 10b5-1 plans are higher when good news is disclosed, and each of these are higher when the disclosed news is better. Disclosure of good news on Rule 10b5-1 selling days is greatest in the health care sector and among mid-cap firms. I show that stock prices reverse after high levels of Rule 10b5-1 selling on positive news days, and that the price reversal increases with the share volume of Rule 10b5-1 selling. I show that, whatever might be said about health care executives’ advantageous stock sales as they developed vaccines during the pandemic of 2020, those sales were not uncommon.

Keywords: insider, trading, information, finance, law, 10b5-1

JEL Classification: G14, K22

Suggested Citation

Mitts, Joshua, Insider Trading and Strategic Disclosure (December 7, 2020). Columbia Law and Economics Working Paper No. 636, Available at SSRN: or

Joshua Mitts (Contact Author)

Columbia Law School ( email )

435 West 116th Street
New York, NY 10025
United States

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