Are corporate managers savvy about their stock price? Evidence from insider trading after earnings announcements |
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| Authors: | Adam Kolasinski Xu Li |
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| Institution: | 1. Michael G. Foster School of Business, University of Washington, 335 Mackenzie Hall, Seattle, WA 98195-3200, USA;2. School of Management, University of Texas at Dallas, 2601 N. Floyd Road, Office 4.427 (SM 41), Richardson, TX 75083-0688, USA |
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| Abstract: | We find that insiders trade as if they exploit market underreaction to earnings news, buying (selling) after good (bad) earnings announcements when the price reaction to the announcement is low (high). We also find that insider trades attributable to public information about earnings and the price reaction generate abnormal returns. By demonstrating that managers spot market underreaction to earnings news, our results imply that managers are savvy about their company’s stock price. |
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| Keywords: | G14 M41 |
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