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Strategic insider trading around earnings announcements in Australia
Author(s) -
Katselas Dean
Publication year - 2020
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12478
Subject(s) - earnings , insider trading , context (archaeology) , insider , business , term (time) , accounting , period (music) , monetary economics , financial economics , economics , finance , political science , law , history , acoustics , physics , quantum mechanics , archaeology
This paper tests, within the Australian setting, whether directors strategically time trades in their own firms, around earnings announcements, in the context of impediments to trading in the immediately preceding period. I show that both signed and unsigned trade activity are insignificantly different from zero in the preceding period, and significantly negative and positive after the event. Further, directors in Australia significantly sell following positive earnings news, and buy after negative news, providing evidence of ‘indirect’ trading. Directors’ trades in the longer‐term pre‐announcement period are also negatively related to the news content sentiment, contrary to expectation. Finally, I find evidence of positive autocorrelation between directors’ trades over the longer‐term past, and those executed after earnings announcements, which, in the absence of the ‘short‐swing’ rule in Australia, casts doubt over short‐term strategic insider trading, more generally.