Publication Type
Working Paper
Version
publishedVersion
Publication Date
5-2019
Abstract
Prior evidence on pre-bankruptcy-filing informed trade is mixed. The inconclusive findings might result from the sole focus on stock trading. We reassess the presence of pre-filing informed and insider trades by examining the information content of options trading before bankruptcy announcements. We find that bankruptcy filing returns are not significantly related to pre-filing insider stock trading. However, filing returns are significantly negatively related to pre-filing insider and informed options trading. The informational content of options trading reduces with options illiquidity and the amount of information impounded into pre-filing stock prices.
Keywords
Bankruptcy, O/S, Informed Options Trading, Insider Trading
Discipline
Business | Corporate Finance | Finance and Financial Management
Research Areas
Finance
First Page
1
Last Page
47
Identifier
10.2139/ssrn.2302888
Publisher
SSRN
Citation
Ge, LI; HU, Jianfeng; Humphery-Jenner, Mark; and LIN, Tse-Chun.
Informed options trading prior to bankruptcy filings. (2019). 1-47.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/4517
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2139/ssrn.2302888