Seminarios

Autores: Harold Contreras y Francisco Marcet

Presenta: Francisco Marcet

Abstract: This study explores insider trading patterns after earnings announcements under different surprises. Specifically, we show that insiders trade differently depending on the type of analysts whose earnings forecasts are met or beaten. We define top and non-top analysts according to several dimensions associated with the importance of analysts' characteristics for investors. Moreover, we show that insiders trade heavily when top analysts' earnings forecasts are met or beaten, even though the stock price reaction after the earnings announcement is similar when firms meat or beat top or non-top analyst. However, we show that post-abnormal returns are less affected by insider trading after positive surprises associated with top-analyst EPS forecasts. Overall, our results suggest that insiders strategically select moments when stock price impact and legal scrutiny is minimal. As a result, stock prices become less efficient as they adjust slowly to insider trades.

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