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If It's Good for the Firm, It's Good for Me: Insider Trading and Repurchases Motivated by Undervaluation


  • I would like to especially thank my dissertation advisor, Kathleen Kahle, for her advice, encouragement, and valuable feedback. The deepest appreciation also goes to my dissertation committee, Eric Kelley, Sandy Klasa, and Ronald Oaxaca, for their advice and helpful comments. I also would like to thank Robert Van Ness (the editor), an anonymous referee, Ed Dyl, Chris Lamoureux, Don Shelly, and the seminar participants at The University of Arizona for their comments and suggestions.

Corresponding author: 3146 Alumni Hall, School of Business, Southern Illinois University Edwardsville, Edwardsville, IL 62026; Phone: (618) 650-5792; Fax: (618) 650-3047; E-mail:


My findings suggest that information inherent in insider trading can be used to identify undervalued repurchasing firms. I examine the relation between insider trading and the performance of open market repurchase (OMR) firms. I show that firms with high net insider buying prior to OMR announcements not only earn abnormal stock returns in both the short- and long-run, but also exhibit better operating performance. Overall, the evidence is consistent with insiders timing their trades prior to OMR announcements.

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