Why do insiders trade? Evidence based on unique data on Swedish insiders

Kallunki, Juha‐Pekka; Nilsson, Henrik; Hellström, Jörgen

doi:10.1016/j.jacceco.2009.06.002

Cited by 72 publications

(74 citation statements)

References 33 publications

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“…Studies on employee stock purchases indicate that insiders are more likely to purchase shares in periods preceding stock market improvements (e.g., Lakonishok and Lee, 2001;Piotroski and Roulstone, 2005;Kallunki et al, 2009;Ravina and Sapienza, 2009). Similarly, since the ultimate value of the deferrals will depend upon the firm's future market performance, we predict director equity deferrals to depend upon directors' expectations regarding the firm's future prospects.…”

Section: Firm Prospectsmentioning

confidence: 99%

“…First, we expect outside directors who already have a significant fraction of their wealth invested in the firm to defer lower amounts into equity because of under-diversification concerns. Consistent with this hypothesis, related research on insider trading finds that employees are less likely to buy firm shares when they already hold large stock holdings in the firm (e.g., Ke et al, 2003;Huddart el al., 2007;Kallunki et al, 2009). % Sharesheld measures the proportion of the firm's common shares outstanding owned by the director at the end of the prior year.…”

Section: Personal Characteristicsmentioning

confidence: 99%

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Abnormal Accruals in Newly Public Companies: Opportunistic Misreporting or Economic Activity?

2016

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Newly public companies tend to exhibit abnormally high accruals in the year of their initial public offering (IPO). Although the prevailing view in the literature is that these accruals are caused by opportunistic misreporting, we show that these accruals do not appear to benefit managers and instead result from the normal economic activity of newly public companies. In particular, and in contrast to the notion that managers benefit from inflating accruals through an inflated issue price, inflated post-IPO equity values, and increased insider trading profits, we find no evidence of a relation between abnormal accruals and these outcomes. Instead, consistent with these accruals resulting from normal economic activity, we find that these accruals are attributable to the investment of IPO proceeds in working capital and that controlling for the amount of IPO proceeds invested in working capital produces a more powerful accrual-based measure of misreporting. AbstractThis study investigates the determinants and trading performance of outside directors' equity deferrals, which represent the choice to convert part or all of their annual cash compensation into deferred company stock. Using a large sample of S&P1500 firms that allowed directors to defer their cash fees into equity between 1999 and 2009, we find significant associations between equity deferral choices and specific features of the director compensation plans, proxies for directors' outside wealth diversification, and future firm stock market performance. Trading performance analyses indicate that outside directors earn substantial abnormal returns from their deferrals, with a significant proportion of the deferral transactions occurring during blackout periods. These results are consistent with companies structuring director equity deferral plans to circumvent SEC Rule 10b-5's trading restrictions.Key words: outside directors; deferred compensation; insider trading; SEC Rule 10b-5 plans.a We are grateful to Mary Barth (the department editor), an anonymous associate editor, and three anonymous referees for very constructive comments. We also appreciate helpful suggestions from

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Section: Firm Prospectsmentioning

confidence: 99%

Section: Personal Characteristicsmentioning

confidence: 99%

Abnormal Accruals in Newly Public Companies: Opportunistic Misreporting or Economic Activity?

2016

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“…In contrast to the U.S. (Zingg et al 2007) and Sweden (Kallunki et al 2009). For the Netherlands, Degryse et al (2009) find that insider purchases are associated with significantly positive abnormal returns.…”

Section: Insider Trades and Future Abnormal Returnsmentioning

confidence: 94%

Do Managers Trade on Public or Private Information? Evidence from Fundamental Valuations

Veenman

2012

SSRN Journal

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Using accounting-based (residual income) valuations, this study examines the extent to which abnormal returns after insider share trades are explained by private information versus mispricing of public information. For a sample of insider trades in the Netherlands (1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008), I find that managers' share purchase decisions are associated with positive future abnormal returns as well as equity undervaluation. Even though undervaluation results in predictable price increases, positive abnormal returns following purchases persist after controlling for fundamental valuations. Thus, this study provides evidence on the sources of managers' personal trading gains and suggests that positive abnormal returns after insider share purchases reflect both private information and managers' responses to market mispricing of public information. Keywords: insider trading; mispricing; residual income valuation; private informationThis study is partly based on my dissertation completed at the University of Amsterdam. I appreciate the helpful comments and suggestions from an anonymous reviewer, Joost Impink, and Laurence van Lent (editor). I also thank seminar participants at the University of Amsterdam, the European Accounting Association annual meeting, and the Monash University PhD Accounting and Finance Symposium in Prato for helpful comments on earlier drafts.

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“…Il existe une littérature abondante, ancienne et récente, sur les opérations d'initiés [voir Jaffe, 1974;Finnerty, 1976;Seyhun, 1986;Ke et al, 2003;Etebari et al, 2004;Fidrmuc et al, 2006;Dymke et Walter, 2008;Aktas et al, 2008;Kallunki et al, 2009;Betzer et Theissein, 2009;Betzer et Theissein, 2010;Kolasinski et Li, 2010;etc.]. La plupart de ces recherches ont conclu que les initiés réalisent des rendements anormaux en achetant ou en vendant légalement les titres de leurs entreprises.…”

Section: Revue De La Littératureunclassified

Improving Municipal Information and Knowledge Management Capabilities: Case Study

Ekionea

Fillion

Koffi

2012

J. Info. Know. Mgmt.

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AcknowledgementsThere is a great deal of work to coordinate and administer all of the activities of the Atlantic Schools of Business Conference. In particular, the coordination of activities from the call for papers to the acceptance process is very extensive. We would like to thank the many people involved to help us with this central aspect of the conference. Thanks to Ms. Amanda Strongman who took on the initiative and perseverance to automate the paper submission process using Easy Chair this year. The use of this tool provided many insights from an organizing perspective that were invaluable. We would also like to thank the track chairs (see next section for a track chair list) who provided timely and helpful feedback about how to improve the process and managed the review process for the papers submitted to their tracks. Their commitment to getting reviews for all papers and providing feedback to authors involved an immense amount of work which we are thankful they took on. Finally, we would like to thank all the reviewers who took the time to review papers in their area of expertise and offer constructive feedback to authors to help improve their work. This process relies on volunteers from across the region. We are grateful that the spirit of academic development and achievement is alive and well! Your contributions in this area make the ASB conference possible! Sincerely, Wendy R. Carroll Conference Chair Atlantic Schools of Business Executive Stream PageAccounting 1 Business Communications 13 Business History 50Finance 84 Human Resources and Industrial Relations 197 Information Systems 258 Management Education 307Marketing 323 Organizational Theory 384Strategy 430 ASB Conference 2011 Proceedings Accounting StreamUniversity of PEI IntroductionCorporate Social Responsibility (CSR) has received growing attention in the last several decades. Its impact dramatically reached the top echelons of the United Nations when UN Secretary-General Kofi Annan proposed The Global Compact at the World Economic Forum in Davos, Switzerland in 1999 (Bitanga and Bridwell, 2010). The Global Compact has grown to encompass more than 8,700 corporate participants and others stakeholders, including over 7,700 businesses in 130 countries around the world (United Nations Global Compact, 2011a).The UN Global Compact is a voluntary initiative that relies on public accountability, transparency, and enlightened corporate self-interest. The basic idea is that the voluntary involvement of companies in the areas of human rights, labor rights, environmental degradation, and anti-corruption can encourage private innovation and concern within these areas in a manner that regulation has been unable to adequately achieve, thereby hastening the emergence of a more sustainable and just future (Kell and Levin, 2002).The benefits for companies voluntarily affiliating with the UN Global Compact have been little documented from an empirical perspective. A survey by Cetindamar and Husoy (2007) documented the motivations of some firms for adherin...

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Why do insiders trade? Evidence based on unique data on Swedish insiders

Cited by 72 publications

References 33 publications

Abnormal Accruals in Newly Public Companies: Opportunistic Misreporting or Economic Activity?

Abnormal Accruals in Newly Public Companies: Opportunistic Misreporting or Economic Activity?

Do Managers Trade on Public or Private Information? Evidence from Fundamental Valuations

Improving Municipal Information and Knowledge Management Capabilities: Case Study

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