Fraudulently Misstated Financial Statements and Insider Trading: An Empirical Analysis
The Accounting Review
Posted: 14 Dec 1997
Abstract
This study investigates the relationship between insider trading and fraud. We find that in the presence of fraud, insiders reduce their holdings of company stock through high levels of selling activity as measured by either the number of transactions, the number of shares sold, or the dollar amount of shares sold. Moreover, we present evidence that a cascaded logit model, incorporating insider trading variables and firm-specific financial characteristics, differentiates companies with fraud from companies without fraud.
JEL Classification: M49, G32, K22
Suggested Citation: Suggested Citation
Summers, Scott L. and Sweeney, John T., Fraudulently Misstated Financial Statements and Insider Trading: An Empirical Analysis. The Accounting Review, Available at SSRN: https://ssrn.com/abstract=46565
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