By exploiting the exogenous reductions of analyst coverage due to closures and mergers of brokerage firms, I examine the causal impact of information asymmetry on insider trading. I find that corporate insiders' abnormal returns increase sharply after coverage reductions. This effect is stronger...

This paper contributes to the debate on the consequences of increased disclosure regulation by investigating the effects of expedited reporting requirements of Form 4 filings, mandated by the Sarbanes-Oxley Act (SOX), on the market response to earnings announcements. We first confirm that SOX...

We examine corporate insider transactions around Sarbanes-Oxley §403 (SOX) regulatory regimes and subsequent Wall Street Journal (WSJ) media postings — and provide new evidence on the benefit/cost trade-off tension between private information transfer and stock trading costs. SOX increased...

Accounting research, whether founded in an economics or sociological paradigm, has generally treated regulation as an exogenous part of the environment that shapes the behavior of those who operate within it. Recently, joining those who have advanced the regulator capture hypothesis, the...

Professor John P. Anderson's article, What's the Harm in Issuer-Licensed Insider Trading?, argues that my “Law of Conservation of Securities” has no moral relevance to the question whether to allow such trading.The Law of Conservation of Securities demonstrates that each stock market insider...

A U.S. firm buying and selling its own shares in the open market can trade on inside information more easily than its own insiders because it is subject to less stringent trade- disclosure rules. Not surprisingly, insiders exploit these relatively lax rules to engage in indirect insider trading:...

We investigate if prior professional legal education either restrains or increases the extent to which the insider trades of company executives and directors are informed. We show that executives and directors with legal expertise (lawyer-insiders) earn significantly lower abnormal returns than...

This paper examines the association between insider trading before an earnings announcement and the magnitude of the post-earnings announcement drift (PEAD). Consistent with insiders' private information being incorporated into prices through their trading, we find PEAD is significantly lower...

The press has given the public the impression that insider trading is evil, unethical and illegal, when in fact such is not always the case. In some cases, insider trading is beneficial to the economy and to shareholders. Whether insider trading is harmful, unethical or illegal depends on many...

This paper examines the association between insider trading prior to quarterly earnings announcements and the magnitude of the post-earnings announcement drift (PEAD). We conjecture and find that insider trades reflect insiders’ private information about the persistence of earnings news. Thus,...