Trading against the grain: When insiders buy high and sell low

Document Type

Article

Publication Date

11-1-2019

Abstract

Both behavioral biases and informational advantages can drive insider trades. The authors document that US corporate insiders anchor on the 52-week low (high) for stock purchases (sales). They then find that insider trades made when stock prices are far from their anchor levels are more informative, suggesting that when insiders trade against the anchoring bias, private information is providing the catalyst to overcome the bias. The authors further show that outside investors can reap sizeable abnormal returns by piggybacking on insiders who make these buy-high, sell-low trades.

Identifier

85081689163 (Scopus)

Publication Title

Journal of Portfolio Management

External Full Text Location

https://doi.org/10.3905/jpm.2019.46.1.139

ISSN

00954918

First Page

139

Last Page

151

Issue

1

Volume

46

Grant

71573177

Fund Ref

Leir Foundation

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