The Sound of Silence: What Do We Know When Insiders Do Not Trade?

نویسندگان

چکیده

This paper examines the information content of insider silence, periods no trading. We hypothesize that, to avoid litigation risk, rational insiders do not sell own-company shares when they anticipate bad news; neither would buy, given unfavorable prospects. Thus, keep silent. By contrast, significant news. Future stock returns are significantly lower following silence than net selling, especially among firms with higher risk. examine two quasinatural experiments where new laws result in changes shareholder risks for insiders. In both cases, risks, stocks stay silent earn other stocks. was accepted by Karl Diether, finance.

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ژورنال

عنوان ژورنال: Management Science

سال: 2022

ISSN: ['0025-1909', '1526-5501']

DOI: https://doi.org/10.1287/mnsc.2021.4113