e-journal

Transient institutional investors and insider trading signals

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Purpose – The aim of this paper is to examine how informed traders, i.e. transient institutional
investors that actively trade on information to maximize investment profits, use insider trading
signals in addition to accounting numbers to mitigate future abnormal returns.
Design/methodology/approach – Using a sample of 44,843 firm-quarters from 1988 to 2001
in the USA, the paper examines how informed investors use insider trading signals and the extent
to which the use of these signals by informed investors impacts insiders’ future abnormal returns
from trading.
Findings – This study finds that the change in transient institutional ownership in the next-quarter
is positively associated with net insider trading in the current quarter, after controlling for accounting
information (including total accruals, unexpected earnings, etc.). In addition, this study finds that
insider profits decrease in transient institutional ownership, consistent with the notion that trading by
informed investors limits insider profits.
Research limitations/implications – The institutional ownership data are only available on a
quarterly basis, which may not capture institutional investors’ immediate response to insider trading
signals.
Originality/value – This study provides systematic evidence on how informed traders use insider
trading signals. This study adds to existing knowledge of the information environment of institutional
investors by showing that transient institutional investors use insider trading signals in addition to
accounting information in making investment decisions. Moreover, this study contributes to the
literature on the determinants of insider profits by providing evidence that informed trading by
investors has incremental power to explain insider profits.

Keywords Accounting, Investors, Insider trading, Accounting information, Singapore

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Ketersediaan

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Informasi Detail

Judul Seri

International Journal of Accounting and Information Management

No. Panggil

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Penerbit

: Emerald Group., 2011

Deskripsi Fisik

International Journal of Accounting and Information Management Vol. 19 No. 2, 2011 pp. 118-145

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

AKUNTANSI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

Lampiran Berkas

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