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Bridge over ocean
1 September 1997 Financial Analysts Journal Volume 53, Issue 5

Mimickers of Corporate Insiders Who Make Large-Volume Trades

  1. Carr Bettis
  2. Don Vickrey
  3. Donn W. Vickrey

Most prior research shows that corporate insiders can systematically earn abnormal returns by buying or selling their own securities. Also, several studies have investigated whether outsiders can earn abnormal returns by mimicking the trades of insiders after the latter report their trades. The findings of these studies suggest that they cannot. In contrast, this study's results indicate that outsiders can earn significant abnormal returns by mimicking such trades. This conclusion is consistent with a growing body of empirical literature that suggests that the market is not efficient in the semistrong form (i.e., is not efficient with respect to all publicly available information).

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