insider trading and corporate information transparency

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1、TheFinancialReview47(2012)645–664InsiderTradingandCorporateInformationTransparencyFengGu∗StateUniversityofNewYorkatBuffaloJohnQ.LiHunterCollege,CityUniversityofNewYorkAbstractOurstudyexaminestherelationbetweeninsidertradingandcorporateinformationtrans-parency.Wefindanegativerelationbet

2、weenfirms’informationtransparencyandtheeconomicsignificanceofinsidertrading,includingtheamountofinsiderpurchaseandsaleandtheprof-itabilityofinsidertransactions.Wealsofindanegativerelationbetweeninformationtrans-parencyandstockpricereactiontonewsofinsidertrading,whichsuggeststhatincreas

3、esininformationtransparencypreemptinsiders’privateinformation.Ourstudyprovidesevidenceconsistentwithfirms’transparency-enhancingactivitiesdecreasinginformationasymmetrybetweeninsidersandinvestorsbyrevealinginsiders’privateinformationtoinvestorsinatimelymanner.Keywords:corporateinformat

4、iontransparency,insidertrading,informationasymmetryJELClassification:G1∗Correspondingauthor:DepartmentofAccounting&Law,JacobsManagementCenter,StateUniversityofNewYorkatBuffalo,Buffalo,NY14260-4000;Phone:(716)645-3273;Fax:(716)645-3823;E-mail:fgu@buffalo.edu.ResearchsupportfromtheStateU

5、niversityofNewYorkatBuffaloandHunterCollege,CityUniversityofNewYorkisgreatlyacknowledged.TheauthorsthankBonnieVanNess(editor)andananonymousreviewerforveryhelpfulcommentsandsuggestions.C2012,TheEasternFinanceAssociation645646F.GuandJ.Q.Li/TheFinancialReview47(2012)645–6641.Introduction

6、Insidertradingfrequencyandprofitabilityareimportantindicatorsofinsid-ers’informationadvantageanditseconomicvalue.Undersecuritieslaws,insidersengagedinstocktradinghaveresponsibilitiestoensureinformationtransparencytoinvestors.Ourstudyexaminestherelationbetweeninsidertradingandcorpo-rate

7、informationtransparency.Thisrelationisintriguing:Whileanimportantgoaloftransparencyistoensureinformationequalitybetweeninsidersandinvestors,insiderstockholdinggivesmanagers/insidersanincentivetotradeonundisclosedinformation,leadingtoapotentialconflictofinterestinthedecisionmakingofco