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The information content of directors' trades: empirical analysis of the Australian market

Hotson, Lisa, Singh, Hariminder and Kaur, Navjot 2008, The information content of directors' trades: empirical analysis of the Australian market, Investment management and financial innovations, vol. 5, no. 3, pp. 122-133.

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Title The information content of directors' trades: empirical analysis of the Australian market
Author(s) Hotson, Lisa
Singh, Hariminder
Kaur, Navjot
Journal name Investment management and financial innovations
Volume number 5
Issue number 3
Start page 122
End page 133
Publisher Dilovi Perspektyvy
Place of publication Sumy, Ukraine
Publication date 2008
ISSN 1810-4967
1812-9358
1813-4998
Keyword(s) insider trading
mergers
market efficiency
Summary We examine the trading activities of directors in shares of their own companies on the Australian Stock Exchange during the July-December 2005 period. We find that directors of small companies in particular earn abnormal return after both their 'Purchase' and as well as their 'Sale' trade. Directors of these companies have an uncanny ability to time the market by trading when mispricing is greatest, and are able to predict the future performance of their firms in short run. For directors of medium and large companies, we find evidence that 'Sale' trades are the ones which work as loss avoiders. Outsiders recognise to some extent that directors' trades are informative, however they are slow to incorporate the new information into prices, refuting much of the market efficiency literature.
Language eng
Field of Research 150303 Corporate Governance and Stakeholder Engagement
HERDC Research category C1 Refereed article in a scholarly journal
HERDC collection year 2008
Copyright notice ©2008, Dilovi Perspektyvy
Persistent URL http://hdl.handle.net/10536/DRO/DU:30017518

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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