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FURTHER EVIDENCE ON INSIDER TRADING AND THE MERITS OF SECURITIES CLASS ACTIONS
Author(s) -
Iqbal Zahid,
Shetty Shekar,
Wang Kun
Publication year - 2007
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.2007.00227.x
Subject(s) - insider trading , insider , securities fraud , class (philosophy) , class action , business , accounting , actuarial science , stock (firearms) , set (abstract data type) , financial economics , economics , monetary economics , finance , computer science , law , political science , state (computer science) , supreme court , algorithm , artificial intelligence , engineering , programming language , mechanical engineering
To provide further evidence on the merits of securities class actions, we examine insider transactions immediately before and during the class period, using a larger and newer data set. We show that insiders reduce their stock sales by an abnormal amount immediately before the class period. Alternative measures of insider transactions and analysis of data before the enactment of the Private Securities Litigation Reform Act of 1995 provide consistent results. These new findings indicate that class actions, on average, have merit. Our data also reestablish a previous empirical result that there is no abnormal selling during the class period.