| Summary: | 博士 === 國立中央大學 === 企業管理研究所 === 93 === ABSTRACT
Previous studies have shown that prior to listing, firms experience significantly positive excess returns, yet average abnormal returns following the listing are negative. This finding contradicts the claim that shareholders benefit from exchange listing. Under this circumstance, it is interesting to explore how insiders behave and how markets respond to their transfer trades. The moves of the banks from the OTC market to the TSE and the very nature of opaque private information rooted in the impressive regulated images of regulation, together with the unique disclosure regulations in Taiwan that require the revelation of both planned and unexecuted insider transfer trades, provide ample opportunity for investigating insider trading around exchange listing. Testing market response to insider transfer trades during the pre- and post-listing periods provides further understanding of bank listing decisions. By examining whether the market reaction to revealed insider transfer behavior differs markedly between the two periods, the information content of insider trading can be explored in detail.
Significant positive abnormal returns are found for the several days preceding the announcement of planned insider transfer trades during both the pre- and post- listing periods. This evidence indicates the timing ability of insider decisions, and supports the claim that insiders tend to sell stocks when they are overvalued. Compared with the insignificant negative price effects for the pre-transaction announcement of planned insider transfer trading and for the post-transaction announcement of unfulfilled insider transfer trading in the post-listing period, the significant negative stock price reaction to the pre-transaction announcement and the significant positive stock price reaction to the post-transaction announcement in the pre-listing period manifest that insider selling before listing affect market prices and probably indicate the assessment of insiders regarding the prospects of listing on the national exchange. Since banking firms experience exceptional stock returns before listing and suffer poor post-listing stock performance, the insider transfers themselves reveal information consistent with, and reinforcing that associated with the managerial timing of listing decisions. Furthermore, corresponding increases in trading volume turnover are observed immediately following the announcement of planned insider transfers, providing additional evidence regarding information flow on insider transfer trading.
Exploring the link between the CAR of the pre-transaction announcement period and subsequent insider transferring behavior strongly supports the notion that the degree to which insiders execute their transfers depends on how the stock price reacts to the announcement of planned insider transfer trades. Furthermore, this research demonstrates that typical insiders in banking firms who sell in the pre-listing period avoid likely losses from delaying the sales until the post-listing period. Specifically, this research finds that the magnitude of the profits (losses) over the transaction period for insider transfer trades is associated with the degree to which insiders execute their planned transfer trading (complete transfer versus incomplete transfer). The present evidence further reinforces the point that real time investor knowledge of insider transfer activity can facilitate more orderly price movements and more efficient reflection of private information in stock prices.
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