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- Title
INSIDER TRADING: SOME EVIDENCE ON MARKET EFFICIENCY AND DIRECTORS' SHARE DEALINGS IN GREAT BRITAIN.
- Authors
Pope, P. F.; Morris, R. C.; Peel, D. A.
- Abstract
This article reports the results of a study, the primary purpose of which was to obtain evidence for the first time on the degree of profitability of one form of insider trading in the market for British equities. In particular, the behavior of security prices over the pre- and post-trading periods might provide indications about whether insider trading is systematically motivated by short run profit-seeking or profit-taking considerations, or instead whether insiders make use of trading activities to communicate signals to the market. The results reported in this paper are generally consistent with previous work undertaken on this topic in North America, to the extent that there appears to be a sharp market reaction around the date of insider dealings. Moreover, as in the earlier of these other studies, there was also some evidence which might suggest that, with the benefit of hindsight and ignoring bid-ask spreads and transaction costs, abnormal returns could have been earned from a trading strategy predicated on news of directors' share dealings. It would follow, therefore, that if agents had developed a trading rule based on previous experience in the U.S. and Canada, the market could have been informationally, inefficient with respect to the disclosure of such events.
- Publication
Journal of Business Finance & Accounting, 1990, Vol 17, Issue 3, p359
- ISSN
0306-686X
- Publication type
Academic Journal
- DOI
10.1111/j.1468-5957.1990.tb01191.x