Does Prior Record Matter In the Information Content Of Planned Insider Selling Announcements?

• Main Authors: Wu, Wanchi, 吳婉綺
• Other Authors: Liao, Tsailing
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/00660454567266838084

碩士 === 靜宜大學 === 財務金融學系 === 100 === Given the information advantage enjoyed by insiders over other market participants, insider trading activities provide useful signals for firm valuation. As the Securities and Exchange Act (Articles 22-2 and 25) in Taiwan requires that insiders who want to sell their stock holdings on the open market must file their planned selling trades with the regulatory authority in advance, insider selling is regarded as one of the most direct signals conveying private information to the market. However, insiders are not necessitated to fulfill their planned sales ex post by regulation. Under this regulatory environment, planned insider selling announcements are not always fulfilled by the follow-up actions. In this circumstance, the information effect of planned insider selling announcements thus still appears to be an open question. Consequently, this study investigates the influence of prior record on the information content of subsequent planned insider selling announcements. The empirical results indicate that prior record negatively affects the market response to subsequent planned insider selling announcements. Moreover, subsequent planned insider selling announcements with prior record of partially and completely fulfilled insider sales, completely fulfilled insider sales, or a higher level of execution in insider sales entail a stronger negative market response when compared with those having prior record of completely unfulfilled insider sales, partially and completely unfulfilled insider sales, or a lower level of execution in insider sales.