Modelling the Information Content in Insider Trades in the Singapore Exchange

Over the past decade, numerous studies have debated the usefulness of insider trading. One particularly important study relates to the informational role that insiders’ transaction volumes have on trading activity in the equity market. In our paper, we examine whether insiders’ purchases (sales) ind...

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Main Authors: WONG, K. A., SEQUEIRA, J. M.
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Language:English
Published: Institutional Knowledge at Singapore Management University 2005
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Online Access:https://ink.library.smu.edu.sg/lkcsb_research/5056
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spelling sg-smu-ink.lkcsb_research-60552017-01-26T06:54:06Z Modelling the Information Content in Insider Trades in the Singapore Exchange WONG, K. A. SEQUEIRA, J. M., Over the past decade, numerous studies have debated the usefulness of insider trading. One particularly important study relates to the informational role that insiders’ transaction volumes have on trading activity in the equity market. In our paper, we examine whether insiders’ purchases (sales) indicate positive (negative) earnings announcements. We argue that if insiders have early access to publicly announced information, then the issuance of good (bad) news should be preceded by insider buying (selling) activities. The results reveal that insiders’ trading volume play an important role in the dissemination of private information to the investing public. In particular, insiders’ purchases (sales) are found to be a good indication of good (bad) news. The information content in insiders’ trades may be exploited, provided investors are able to realize returns within one, and at most two months, after the announcement date. 2005-05-26T07:00:00Z text https://ink.library.smu.edu.sg/lkcsb_research/5056 Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University Insider trading Efficient market hypothesis Finance Finance and Financial Management
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Insider trading
Efficient market hypothesis
Finance
Finance and Financial Management
spellingShingle Insider trading
Efficient market hypothesis
Finance
Finance and Financial Management
WONG, K. A.
SEQUEIRA, J. M.,
Modelling the Information Content in Insider Trades in the Singapore Exchange
description Over the past decade, numerous studies have debated the usefulness of insider trading. One particularly important study relates to the informational role that insiders’ transaction volumes have on trading activity in the equity market. In our paper, we examine whether insiders’ purchases (sales) indicate positive (negative) earnings announcements. We argue that if insiders have early access to publicly announced information, then the issuance of good (bad) news should be preceded by insider buying (selling) activities. The results reveal that insiders’ trading volume play an important role in the dissemination of private information to the investing public. In particular, insiders’ purchases (sales) are found to be a good indication of good (bad) news. The information content in insiders’ trades may be exploited, provided investors are able to realize returns within one, and at most two months, after the announcement date.
format text
author WONG, K. A.
SEQUEIRA, J. M.,
author_facet WONG, K. A.
SEQUEIRA, J. M.,
author_sort WONG, K. A.
title Modelling the Information Content in Insider Trades in the Singapore Exchange
title_short Modelling the Information Content in Insider Trades in the Singapore Exchange
title_full Modelling the Information Content in Insider Trades in the Singapore Exchange
title_fullStr Modelling the Information Content in Insider Trades in the Singapore Exchange
title_full_unstemmed Modelling the Information Content in Insider Trades in the Singapore Exchange
title_sort modelling the information content in insider trades in the singapore exchange
publisher Institutional Knowledge at Singapore Management University
publishDate 2005
url https://ink.library.smu.edu.sg/lkcsb_research/5056
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