Recent Canadian Experience on the Profitability of Insider Trades |
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| Authors: | Moon H. Lee Halim Bishara |
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| Affiliation: | University of Saskatchewan, Saskatoon, Canada. This study was funded by a research grant from the Financial Research Foundation of Canada. The authors thank two anonymous referees for suggestions leading to the improvement of the paper and the participants of the finance workshop at the University of California, Irvine, for valuable comments. |
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| Abstract: | Recent Canadian data on large insider transactions showed that abnormal gains accrued to directors and bank directors during a stock market upturn. During a stock market downturn, beneficial owners, senior officers, and bank directors were compensated by more than the risk-adjusted rates of return from sales of stocks of their own companies. Since Baesel and Stein's early study, abnormal gains persisted in spite of the introduction of stiffer penalties on insider trading. |
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