Title: Which type of insider transaction is more perceived as a signal by the market?

Authors: Tania Morris; Hamadou Boubacar

Addresses: Faculty of Business Administration, University of Moncton, 41, avenue Antonine-Maillet, Moncton, E1A 3E9, N.-B, Canada ' Faculty of Business Administration, University of Moncton, 41, avenue Antonine-Maillet, Moncton, E1A 3E9, N.-B, Canada

Abstract: Using a Canadian dataset, we examine the market reaction to insider transactions to discover if the market reacts with greater certainty to specific types of insider trades. Our results suggest that the market reacts mostly to trades carried out by directors or senior officers of the insider company or the subsidiary of the issuer. These results were steady for both sale and purchase transactions. Another interesting result is that, even though the market does not react to sale and purchase transactions by directors, it reacts to purchases by directors if the director is also an administrator of the issuer. Finally, the transaction size only matters if it is a purchase transaction.

Keywords: insider trading; types of trades; sale transactions; purchase transactions; financial markets; market reaction; Canada; insider transactions; market signals; transaction size.

DOI: 10.1504/IJCG.2013.060475

International Journal of Corporate Governance, 2013 Vol.4 No.4, pp.372 - 390

Received: 15 Jun 2013
Accepted: 08 Feb 2014
Published online: 16 Apr 2014 *

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