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Sales of Secondary Shares in SEOs: A Comparison across Top Managers, Other Insiders, and Outsiders


  • Sinan Gokkaya,

  • Michael J. Highfield

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    • Sinan Gokkaya is an Assistant Professor of Finance in College of Business at Ohio University in Athens, OH. Michael J. Highfield, CFA, is an Associate Professor of Finance, the Robert W. Warren Chair of Real Estate Finance, and the Department Head of Finance and Economics in the College of Business at Mississippi State University in Mississippi State, MS.

  • The authors are grateful to an anonymous referee for insightful comments that have greatly improved the paper. The authors also thank Daniel Bradley, Randy Campbell, Brandon Cline, Christian Farruggio, Andrew Fodor, Aaron Gilbert, Pankaj Jain, Wendy Jennings (Copy Editor), Wayne Kelly, Marc Lipson (Editor), Tom Miller, Greg Nagel, Andrew Prevost, Ken Roskelley, John Stowe, and seminar participants at Mississippi State University, Ohio University, the 2011 Southern Finance Association Annual Meeting, the 2012 Midwest Finance Association Annual Meeting, the 2012 FMA European Meeting, and 2012 FMA Annual Meeting for helpful comments and suggestions. This paper is derived, in part, from Gokkaya's Ph.D. dissertation at Mississippi State University. All errors remain the property of the authors.


This paper investigates the information content of registered insider sales in the Seasoned Equity Offering (SEO) process from 1997 to 2009. We find that initial market reactions and long-run post-issue stock performance are negatively related to C-level executive insider sales, but unrelated to participation by nonexecutive insiders. We also find significantly lower post-issue abnormal earnings surprises for SEOs with C-level executive sales. Overall, the findings are consistent with the predictions of asymmetric information and agency theories.