Insiderss Profits in the Australian Equities Market

Berkman, Henk; Viljoen, Tina; Westerholm, P. Joakim

doi:10.2139/ssrn.2773927

Cited by 2 publications

(6 citation statements)

References 32 publications

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“…Research investigating legal insider trading has long addressed the possibility of short term profit taking by insiders, before transaction costs (e.g. Jaffe 1974;Seyhun 1986, Muelbroek 1992Jeng, Metrick and Zeckhauser 2003;Foo and Watson 2003;Berkman et al 2016). Early literature documents return patterns consistent with the direction of the trade, over various windows thereafter; providing evidence of information based trading (Jaffe 1974;Finnerty 1976;Seyhun 1986).…”

Section: Hypothesis Developmentmentioning

confidence: 99%

Insider trading in Australia: Contrarianism and future performance

Katselas

2018

Pacific-Basin Finance Journal

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This paper examines, within the Australian market, the extent to which legal insider trades are information driven, premised on a disconnect between the market's assessment of firm value, and that of more informed insiders. I address the notion that insiders, endowed with superior information about their firm, are contrarian, reflecting disagreement with the market's current perception of firm value, and also use this knowledge by trading in advance of future performance indicators not known to the market. I find that insiders, directors in particular, are contrarian traders; they buy when their firm is in the bottom tercile according to prior returns (losers), and sell if their firm is a prior winner. Further, this behaviour is exacerbated if the firm is a value (glamour) stock. Finally, I show that even after controlling for the aforementioned factors, directors engage in net buying prior to positive accounting performance changes in the subsequent and following 12 month periods.

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Section: Hypothesis Developmentmentioning

confidence: 99%

Insider trading in Australia: Contrarianism and future performance

Katselas

2018

Pacific-Basin Finance Journal

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“…Similarly, Brown et al (2003) reveal that directors make abnormal returns from sales, in Australia. Further, a recent study by Antoniadis et al (2015) and Berkman et al (2016) note that directors' purchases are not associated with positive abnormal returns in Greece and Australia respectively.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 92%

“…-0,0400 -0,0300 -0,0200 -0,0100 0,0000 The results of some recent studies, such as of Berkman et al (2016) in the Australian setting, state that directors' stock-purchase transactions are not associated with positive abnormal returns. More importantly, Chronopoulos, Mcmillan, Papadimitriou, and Tavakoli (2018) indicate that directors' stock-purchases are associated with negative returns in China, Hong Kong, India, Singapore, and Taiwan.…”

Section: Data Analysis and Interpretationmentioning

confidence: 95%

“…Conversely, Fidrmuc et al (2006) provide evidence of the efficiency of the UK stock market. Berkman et al (2016) suggest that director stock tradings are incorporated into stock prices with a delay in Australia, due to regulatory involvements. In Sri Lanka, Perera and Nimal (2014) reveal that trading volume and trading percentage of director stock-purchase transactions are rapidly reflected in stock prices.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…However, the consequences of such purchases being in par with the predicted outcomes and whether it would reflect stock prices more efficiently are problematic. Contradictory evidence is found on the performance of stock-purchase transactions of directors in many countries (Hossain, Heaney & Yu, 2018;Perera & Nimal, 2014;Perera & Nimal, 2017;Lee & Bishara, 1989;Lakonishok & Lee, 1998;Brown & Foo, 1997, as cited in Hossain et al, 2018Brown, Foo & Watson, 2003;Antoniadis, Gkasis & Sormaset, 2015;Berkman, Bradrania, Prodromu & Westerholm., 2016) as well as for stock price efficiency (Perera & Nimal, 2014;Perera & Nimal, 2017;Lakonishok & Lee, 2001;Berkman et al, 2016;Bajo & Petracci (2006), as cited in Dardas & Guttler, 2011;Bajo, 2010;Jaffe, 1974;Betzer & Theissen, 2008;Fidrmuc, Goergen & Renneboog, 2006). Hence, this study provides a certain value addition to the existing literature by bridging this gap.…”

Section: Introductionmentioning

confidence: 99%

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Directors’ stock-purchases on stock performance: Evidence from Colombo Stock Exchange

Kavinda¹,

Anuradha

2022

IJFAM

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Purpose: This study examines how directors’ stock-purchase transactions would result in stock performance, assessing whether directors’ stock-purchase transactions are rapidly reflected in stock prices in Colombo Stock Exchange, Sri Lanka. Moreover, it studies how stock-purchase transactions based on directors’ gender, would result in stock performance. Research Methodology: The analysis covers a period from March 2013 to March 2019, and includes 141 directors’ stock purchases. Research issues are investigated using an event-study methodology. Results: Significant negative abnormal returns follow directors’ stock-purchase transactions, which indicates they are not rapidly reflected in stock prices. Gender-wise, male directors’ stock-purchase transactions result in significantly negative abnormal returns, whereas for its female counterpart, no significantly abnormal returns are observed. Further, both male and female directors’ stock-purchase transactions are not rapidly reflected in stock prices. Limitation: The study does not consider the number of shares purchased. Certain director stock purchases have to be omitted due to a lack of data. Contribution: Policy-makers could implement actions to prevent harmful trading activities and to improve the reporting timelines of directors' stock purchases. Consequently, the information asymmetry could be minimized. Hence, investors could engage in stock purchases confidently, which results in mitigating the company’s cost of capital.

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Insiderss Profits in the Australian Equities Market

Cited by 2 publications

References 32 publications

Insider trading in Australia: Contrarianism and future performance

Insider trading in Australia: Contrarianism and future performance

Directors’ stock-purchases on stock performance: Evidence from Colombo Stock Exchange

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