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Previous work examined the long-run profitability of strategies mimicking the trades company directors in the shares of their own company, as a way of testing for market efficiency. The current paper examines patterns in abnormal returns in the days around these trades on the London Stock Exchange.We find movements in returns that are consistent with directors engaging in shortterm market timing. We also report that some types of trades have superior predictive content over future returns. In particular, medium-sized trades are more informative for short-term returns than large ones, consistent with Barclay and Warner's (1993)`stealth trading' hypothesis whereby informed traders avoid trading in blocks.Another contribution of this study is to properly adjust the abnormal return estimates for microstructure (spread) transactions costs using daily bid-ask spread data. On a net basis, we find that abnormal returns all but disappear.

Previous work has identified that IPOs underperform a market index, and the purpose of this paper is to examine the robustness of this finding. We re-examine the evidence on the long-term returns of IPOs in the UK using a new data set of firms over the period 1985 ±92, in which we compare abnormal performance based on a number of alternative methods including a calendar-time approach. We find that, using an event-time framework, there are substantial negative abnormal returns to an IPO after the first 3 years irrespective of the benchmark used. However, over the 5 years after an IPO, abnormal returns exhibit less dramatic underperformance, and the conclusion on negative abnormal returns depends on the benchmark applied. Further if these returns are measured in calendar time, we find that the (statistical) significance of underperformance is even less marked.

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This paper examines the pay-performance relationship between executive cash compensation (including bonuses) and company performance for a sample of large UK companies, focusing particularly on the financial services industry, since incentive misalignment has been blamed as one of the factors causing the global financial crisis of 2007-2008. Although we find that pay in the financial services sector is high, the cash-plus-bonus pay-performance sensitivity of financial firms is not significantly higher than in other sectors. Consequently, we conclude that it unlikely that incentive structures could be held responsible for inducing bank executives to focus on short-term results.

This paper reassesses the UK results of significant abnormal returns from directors' trading for a new sample of directors ' trades 1984-1986, and finds that abnormal returns tend to be concentrated in smaller firms. When an appropriate benchmark portfolio is used, it is found that the significance of the abnormal returns is substantially reduced, with the implication that directors' trading does not yield particularly high profits to either the directors themselves or to an outside investor mimicking those trades. 4 I IntroductionRecent studies by King and Röell (1988) and Pope, Morris and Peel (1990) have presented evidence, based on UK share price data, of the returns realised on securities following notification of a director's share dealing. These follow a sequence of studies 1 based on US data, which have examined the impact of `insider dealing' on share prices. Attention has focused particularly on whether non-insiders, observing only a notification of an insider trade, can still generate a positive abnormal return. In this paper we follow Seyhun (1986) and see whether these abnormal returns are related to firm size. We then attempt to discover whether the reported excess returns earned from following directors' trades can be explained by the size effect, under which small firms perform differently from their larger counterparts [Fama and French (1992)].In the next section we review details of the definition of directors' dealing, and Section III then summarises the findings of previous work in this area. Section IV describes the dataset used in this study, which is taken from the Stock Exchange reports of directors' trading in their own

Using a unique data set, we document two secular trends in the shift from centralized to decentralized pension fund management over the past few decades. First, across asset classes, sponsors replace generalist balanced managers with better‐performing specialists. Second, within asset classes, funds replace single managers with multiple competing managers following diverse strategies to reduce scale diseconomies as funds grow larger relative to capital markets. Consistent with a model of decentralized management, sponsors implement risk controls that trade off higher anticipated alphas of multiple specialists against the increased difficulty in coordinating their risk‐taking and the greater uncertainty concerning their true skills.

We document a positive relation between network centrality and risk-adjusted performance in a delegated investment management setting. More connected managers take more portfolio risk and receive higher investor flows, consistent with these managers improving their ability to exploit investment opportunities through their network connections. Greater network connections are shown to be particularly important in reducing the diseconomies-of-scale for large managers who are well-connected. We also use the exogenous merger of two investment consultants, which creates a sudden change in the network connections of the managers they oversee, to provide evidence that a greater number of connections translates into better portfolio performance. † We thank an anonymous referee for many valuable comments and suggestions.