Title

INSIDER TRADING EFFECTS ON STOCK RETURNS AROUND OPEN‐MARKET STOCK REPURCHASE ANNOUNCEMENTS: AN EMPIRICAL STUDY

Document Type

Article

Publication Date

1-1-1995

Abstract

In this paper we empirically examine the effects of insider trading activities, the percentage of common shares outstanding authorized for repurchase, and management ownership on stock returns around open‐market stock repurchase announcements. The study is conducted on a sample of 204 firms that announced open‐market stock repurchases between 1982 and 1990. Results show that insider trading activities during the month that immediately precedes the announcement have a significant effect. While stockholders of firms with insider net selling activities earn positive excess returns, those of firms with insider net buying activities earn larger and more significant excess returns. Insider trading activities during more distant periods do not show any effects on stock returns. Results also indicate that management ownership has a significant positive effect on stock returns, and this effect is more positive when the percentage of common shares outstanding authorized for repurchase is large. © The Southern Finance Association and the Southwestern Finance Association

Publication Name

Journal of Financial Research

Volume Number

18

First Page

45

Last Page

57

Issue Number

1

DOI

10.1111/j.1475-6803.1995.tb00210.x

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