The information content of director trading: Evidence from acquisition announcements in Australia

Hossain, Mosharraf; Heaney, Richard; Yu, Jing

doi:10.1016/j.gfj.2018.09.001

Cited by 5 publications

(2 citation statements)

References 42 publications

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“…Stock-purchases tend to reflect more information than sales on the company's value or prospects (Lakonishok & Lee, 1998;Jeng, Metrick & Zeckhauser, 2003). Further, as Gregory et al (2009) and Hossain et al (2018) disclose, in the UK and the US context, directors exhibit market timing skills where they buy stocks after a run-down in stock price. The market often interprets purchasing signals as a reliable indication of firms' prospects than selling signals.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…However, the consequences of such purchases being in par with the predicted outcomes and whether it would reflect stock prices more efficiently are problematic. Contradictory evidence is found on the performance of stock-purchase transactions of directors in many countries (Hossain, Heaney & Yu, 2018;Perera & Nimal, 2014;Perera & Nimal, 2017;Lee & Bishara, 1989;Lakonishok & Lee, 1998;Brown & Foo, 1997, as cited in Hossain et al, 2018Brown, Foo & Watson, 2003;Antoniadis, Gkasis & Sormaset, 2015;Berkman, Bradrania, Prodromu & Westerholm., 2016) as well as for stock price efficiency (Perera & Nimal, 2014;Perera & Nimal, 2017;Lakonishok & Lee, 2001;Berkman et al, 2016;Bajo & Petracci (2006), as cited in Dardas & Guttler, 2011;Bajo, 2010;Jaffe, 1974;Betzer & Theissen, 2008;Fidrmuc, Goergen & Renneboog, 2006). Hence, this study provides a certain value addition to the existing literature by bridging this gap.…”

Section: Introductionmentioning

confidence: 99%

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Directors’ stock-purchases on stock performance: Evidence from Colombo Stock Exchange

Kavinda¹,

Anuradha

2022

IJFAM

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Purpose: This study examines how directors’ stock-purchase transactions would result in stock performance, assessing whether directors’ stock-purchase transactions are rapidly reflected in stock prices in Colombo Stock Exchange, Sri Lanka. Moreover, it studies how stock-purchase transactions based on directors’ gender, would result in stock performance. Research Methodology: The analysis covers a period from March 2013 to March 2019, and includes 141 directors’ stock purchases. Research issues are investigated using an event-study methodology. Results: Significant negative abnormal returns follow directors’ stock-purchase transactions, which indicates they are not rapidly reflected in stock prices. Gender-wise, male directors’ stock-purchase transactions result in significantly negative abnormal returns, whereas for its female counterpart, no significantly abnormal returns are observed. Further, both male and female directors’ stock-purchase transactions are not rapidly reflected in stock prices. Limitation: The study does not consider the number of shares purchased. Certain director stock purchases have to be omitted due to a lack of data. Contribution: Policy-makers could implement actions to prevent harmful trading activities and to improve the reporting timelines of directors' stock purchases. Consequently, the information asymmetry could be minimized. Hence, investors could engage in stock purchases confidently, which results in mitigating the company’s cost of capital.

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