Bridge over ocean
1 January 2012 Financial Analysts Journal Volume 68, Issue 1

Informed Traders: Linking Legal Insider Trading and Share Repurchases

  1. Konan Chan
  2. David L. Ikenberry
  3. Inmoo Lee
  4. Yanzhi (Andrew) Wang

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.

Read the Complete Article in Financial Analysts Journal Financial Analysts Journal CFA Institute Member Content

We’re using cookies, but you can turn them off in Privacy Settings.  Otherwise, you are agreeing to our use of cookies.  Accepting cookies does not mean that we are collecting personal data. Learn more in our Privacy Policy.