Research support from the State University of New York at Buffalo and Hunter College, City University of New York is greatly acknowledged. The authors thank Bonnie Van Ness (editor) and an anonymous reviewer for very helpful comments and suggestions.
Insider Trading and Corporate Information Transparency
Article first published online: 13 SEP 2012
© 2012, The Eastern Finance Association
Volume 47, Issue 4, pages 645–664, November 2012
How to Cite
Gu, F. and Li, J. Q. (2012), Insider Trading and Corporate Information Transparency. Financial Review, 47: 645–664. doi: 10.1111/j.1540-6288.2012.00345.x
- Issue published online: 13 SEP 2012
- Article first published online: 13 SEP 2012
- corporate information transparency;
- insider trading;
- information asymmetry
Our study examines the relation between insider trading and corporate information transparency. We find a negative relation between firms’ information transparency and the economic significance of insider trading, including the amount of insider purchase and sale and the profitability of insider transactions. We also find a negative relation between information transparency and stock price reaction to news of insider trading, which suggests that increases in information transparency preempt insiders’ private information. Our study provides evidence consistent with firms’ transparency-enhancing activities decreasing information asymmetry between insiders and investors by revealing insiders’ private information to investors in a timely manner.