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Sales of Secondary Shares in SEOs: A Comparison across Top Managers, Other Insiders, and Outsiders
Author(s) -
Gokkaya Sinan,
Highfield Michael J.
Publication year - 2014
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12055
Subject(s) - insider , business , equity (law) , earnings , insider trading , information asymmetry , stock (firearms) , accounting , monetary economics , principal–agent problem , finance , economics , corporate governance , mechanical engineering , political science , law , engineering
This paper investigates the information content of registered insider sales in the Seasoned Equity Offering (SEO) process from 1997 to 2009. We find that initial market reactions and long‐run post‐issue stock performance are negatively related to C‐level executive insider sales, but unrelated to participation by nonexecutive insiders. We also find significantly lower post‐issue abnormal earnings surprises for SEOs with C‐level executive sales. Overall, the findings are consistent with the predictions of asymmetric information and agency theories.