Corporate Governance and Opportunistic Insider Trade
We study the effect of informed trading by U.S. executives on shareholder value. We develop a proxy of insider trading that is driven by management’s private information. We find that our proxy is negatively associated with future earnings performance and contemporaneous stock prices. Our proxy is also positively associated with a common indicator of managerial opportunism, earnings misstatements that result in subsequent restatements. Moreover, the level of our informed trading proxy declines significantly after announcements of earnings restatements, which are usually accompanied with significant corporate governance improvement. Overall, our results suggest that the types of informed trading we identify represent managerial opportunism that reduces shareholder value.
informed trading, Managerial Opportunism, shareholder value
Accounting | Business Law, Public Responsibility, and Ethics | Portfolio and Security Analysis
Corporate Governance, Auditing and Risk Management
American Accounting Association Annual Meeting
City or Country
New York, USA
Gunny, Katherine; Ke, Bin; and ZHANG, Tracey Chunqi.
Corporate Governance and Opportunistic Insider Trade. (2009). American Accounting Association Annual Meeting. Research Collection School Of Accountancy.
Available at: http://ink.library.smu.edu.sg/soa_research/2