Logic suggests that a link might exist between insider trades and share
repurchases because of their potential to signal mispricing when market prices
deviate from fair value; both events emanate from essentially the same set of
decision makers. Using the overall repurchase sample, adding insider-trading
information is generally not helpful. For “value” buyback
companies, however, where perceived mispricing may be a more important factor,
insider trading provides a strong complement to the repurchase signal.