Transactions for a specific company executed within the event-window of a previous insider trade
were eliminated from the sample.
We start by checking whether the reported insider trade
has a matching ticker symbol in the ISSM or TAQ databases for identification purposes.
Where there are no insider trades
or when insider purchases equal insider sales, we classify the observation as "no insider trade
The data on insider trades
used in this study are drawn from the Thomson Reuters insider filings database and cover the period January 1986 to December 2007.
If insider trades
are based upon their private information about future prospects of the firm, however, then their trades may or may not be contrarian in nature.
Piotroski, J./Roulstone, D., Do Insider Trades
Reflect both Contrarian Beliefs and Superior Knowledge about Future Cash Flow Realizations?, Journal of Accounting and Economics, 39, 1, 2005, pp.
At the same time, much of the excitement about the information content of insider trades
, and of insider sales in particular, turns out to be overdone.
Let us now consider the distributional effects of the SEC's safe harbor when an insider trades
according to a prearranged plan.
Before the SEC announced the settlement, it allowed Boesky to cut his trading partnership's liabilities by $1.3 billion through a series of government-sanctioned insider trades
. SEC Chairman John Shad later told a House committee that the market wasn't hurt by those trades because it bounced back after a one-day loss.
Of interest here is the proportion of insider trades
that were sales.
Although all insider trades
must be reported, sales by the president, the chief executive officer and the chief financial officer are the most telling.
* Integrated data--Users are able to access company, industry, and insider level data with the click of a mouse, and move easily from insider trades
to Form 144s to insider holdings.
The basic argument is that the agents engaging in prohibited insider trades
obtain their information via fiduciary relationships, and trading on this information for personal gain represents a breach of duty.
Jagolinzer et al., Political Connections and the Informativeness of Insider Trades
at 9 (Rock Center for Corporate Governance at Stanford University, Working Paper No.
Unlike the United States, however, Canadian insider trades
over the period covered by this study were made public with a significant lag of 40 days or more.