are guaranteed the "Friends and Family" rate -- typically a savings of 30% -- or even more.
Studies show that, on average, stocks that are bought by insiders
tend to outperform the market (http://www.
If the investment public is willing to trade against Warren Buffet and the wizards at Goldman Sachs, perhaps it will not be deterred by the prospect of trading against corporate insiders
The second argument relies on the entrepreneurial role played by corporate managers and how insider
trading could be used to compensate those insiders
for their entrepreneurial activities.
who receive stock options may be restricted as to when they can sell the underlying stock.
I found that an outside investor could have simply bought a diversified portfolio of small-cap stocks with high yields and low price-to-earnings ratios, and would have received almost the same return (with lower risk) as the group of insiders
in my study.
trading is the epitome of an undefined, unconstitutionally vague offense.
So the Insiders
, who conspire for a world without freedom, must obscure their global ambitions.
Partners and staff face tough decisions when managing the insider
trading risk inherent in the freedom to buy and sell securities.
can be non-starters because they've been in a job long enough to have powerful enemies who'll lobby for an outsider.
It's only fitting that the City Council, a country club for insiders
, would once again be headed up by one of its own.
Although the Waste Management example is an extreme case, insiders
such as directors, officers and key executives may be sending valuable signals when they sell their company's shares.
Most business economists know that corporate insiders
have more and better quality information about their companies' future than outside investors.
While the legal definition of who the insiders
are may extend further (see Box 2), this article is concerned with this classic sort of insider
If regulatory and corporate restrictions induce insiders
to delay what otherwise would be profitable trades until after material news is disclosed, we would expect: (1) the incidence of insider
trading will increase after earnings disclosure, (2) post-announcement insider
buys (sells) will be preceded by positive (negative) abnormal stock returns, consistent with foregone trading profits, and (3) no systematic abnormal returns will follow post-announcement insider
trades if public disclosure erodes managers' informational advantage.