Rule 10b5‐1 Trading Plans and Insiders' Incentive to Misrepresent

Veliotis, Stanley

doi:10.1111/j.1744-1714.2010.01096.x

Cited by 10 publications

(1 citation statement)

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“…Under the Private Securities Litigation Reform Act of 1995, some securities class action lawsuits use abnormal insider trading as strong evidence to infer a wrongful state of mind (scienter). But these actions allege accounting and disclosure fraud not insider trading (Veliotis, ). See, also, Huddart et al .…”

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Insightful Insiders? Insider Trading and Stock Return around Debt Covenant Violation Disclosures

Griffin

Lont

McClune

2014

Abacus

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This study asks whether insider trading associates with an information advantage around first-time debt covenant violation disclosures in SEC filings, which potentially results from early access to information about the debt covenant violation disclosure. We document two results. First, we find net insider selling up to 12 months before a debt covenant violation disclosure, which precedes investors' negative returns before disclosure; and net insider buying up to 12 months after disclosure, which precedes investors' positive returns after disclosure. Second, we show that net insider trading one to two months before and after the violation disclosure associates predictably with investors' short-term reaction to the covenant violation announcement.

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confidence: 99%