We analyze the association of board size and stock return volatility for different firm types. First, we find significant evidence that the association is non-linear over all firms. Second, we find that this differs for different firm types. While complex firms show a negative linear...

Do managerial incentive horizons have capital market consequences? We find that they do when short-sale constraints are more binding. Firms experience significant stock price inflation when their CEOs have short horizon incentives. The short-horizon CEOs sell more shares at inflated prices and...

Theory provides competing predictions on the question of whether informed investors immediately trade on newly generated private information. We address this question using SEC-mandated disclosures to identify the dates when new private information about target or acquiring firm value is...

Research argues that short sellers are informed investors as current short selling relates inversely with future returns. However, empirical results have yet to determine whether short sellers trade on private information before, say, an upcoming negative new. This paper takes a step in this...

This paper analyzes the law and economics of insider trading in the context of takeover bids, focusing on the European regulatory framework. We distinguish between trading by the bidder, by the target and by classical insiders and first address the issue of precisely when information about...

We examine derivatives trading prior to takeover rumors in a sample of 1,638 publicly traded U.S. firms. The volume of options traded is abnormally high over the 5-day pre-rumor period, primarily due to the number of out-of-the-money call options traded. In addition, the direction of option...

This paper examines the accruals anomaly in an agency context where managers of overvalued firms engage in various activities, including accruals-based earnings management, to sustain overvaluation. We use managerial trading to operationalize the empirical investigation, hypothesizing that...

We examine whether shareholder litigation deters informed insider trading, utilizing the staggered adoptions of Universal Demand (UD) laws by different states. The UD laws substantially raise the hurdle for shareholders to file derivative litigation. We find that corporate insiders significantly...

We examine insider trading surrounding takeover rumors in a sample of 1,642 publicly traded U.S. firms. Using difference-in-differences regressions, we find that insider net purchases increase within the year prior to the first publication of a takeover rumor, particularly when rumor articles...

Disclosure of insider trading are ambiguous pieces of information, as liquidity traders may not assess whether the trades are motivated by significant privileged information related to the true share value. This paper establishes an algorithm, relying on Bayesian inference that represents the...