Regulated and unregulated insider trading around earnings announcements

Kallunki, Juha‐Pekka; Nilsson, Henrik; Peltoniemi, Janne

doi:10.1007/s10657-008-9089-z

Cited by 2 publications

(2 citation statements)

References 42 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…5 See Roulstone (2003) for a discussion of these issues. Furthermore, it is important to note that insiders trade for reasons other than profiting from private information, including: taxes, portfolio re-balancing (diversification) and liquidity (Kallunki et al, 2009). 6 The original legislation, The Securities and Exchange Act of 1934 and the 1968 Williams Act Amendments, regulate insider trading.…”

Section: Background and Hypothesesmentioning

confidence: 99%

See 1 more Smart Citation

Misvaluation and Insider Trading Incentives for Accrual‐based and Real Earnings Management

Sawicki

Shrestha²

2014

Business Fin & Account

View full text Add to dashboard Cite

Abstract:We investigate the incentives that misvaluation creates for: (1) insider trading; and (2) concurrent earnings management through both accruals and real activities. Managers of overvalued firms have an incentive to sustain overvaluation through income increasing earnings management and, at the same time, to sell their shares (Jensen, 2005). Managers of undervalued firms benefit from buying their firm's shares, however the negative effects of downward earnings management may offset incentives to enhance trading advantages. The results indicate that managers of both over-and under-valued firms act opportunistically, managing earnings upward (downward) with accruals while selling (buying) shares. The Sarbanes-Oxley Act of 2002 (SOX) has been largely ineffective in eliminating trading motivated earnings management. Finally, we do not find evidence of a relationship between managerial trading and real earnings management.

show abstract

Section: Background and Hypothesesmentioning

confidence: 99%

“…See Roulstone () for a discussion of these issues. Furthermore, it is important to note that insiders trade for reasons other than profiting from private information, including: taxes, portfolio re‐balancing (diversification) and liquidity (Kallunki et al., ).…”

mentioning

confidence: 99%