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Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Insider trading and future stock returns in firms with concentrated ownership levels
Author(s): Chronopoulos, Dimitris K
McMillan, David G
Papadimitriou, Fotios I
Tavakoli, Manouchehr
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Keywords: Insider trading
Stock returns
Economic value
Trading strategies
Issue Date: 22-Jun-2018
Citation: Chronopoulos DK, McMillan DG, Papadimitriou FI & Tavakoli M (2018) Insider trading and future stock returns in firms with concentrated ownership levels (Forthcoming/Available Online). European Journal of Finance.
Abstract: We investigate the relationship between insider trading and stock returns in firms with concentrated ownership. To this end, we employ data from East Asian countries which span the period 2003:01-2012:05. Consistent with previous literature, we find a significantly negative relation between the selling activity of insiders and stock returns. However, contrary to studies which focus on highly developed markets, we find that the buying activity of insiders is also inversely related to future stock returns. Our analysis shows that top directors with higher ownership levels drive this result, suggesting that the trading activity of insiders is not always associated with profit making motives and can be explained by their level of ownership. Furthermore, we demonstrate that a trading strategy which focuses solely on purchases made by top directors with high ownership levels yields negative returns. The paper has important implications for outside investors who mimic the trading activity of insiders with the aim to realise profits.
DOI Link: 10.1080/1351847X.2018.1487312
Rights: This item has been embargoed for a period. During the embargo please use the Request a Copy feature at the foot of the Repository record to request a copy directly from the author. You can only request a copy if you wish to use this work for your own research or private study. This is an Accepted Manuscript of an article published by Taylor & Francis Group in European Journal of Finance on 22 Jun 2018, available online:
Notes: Output Status: Forthcoming/Available Online

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