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In Search of the Opportunistic Trades of Insiders
Stockholm University, Faculty of Social Sciences, Stockholm Business School, Finance.
Stockholm University, Faculty of Social Sciences, Stockholm Business School, Finance.ORCID iD: 0000-0002-6342-8309
(English)Manuscript (preprint) (Other academic)
National Category
Business Administration
Research subject
Business Administration
Identifiers
URN: urn:nbn:se:su:diva-160946OAI: oai:DiVA.org:su-160946DiVA, id: diva2:1255436
Available from: 2018-10-12 Created: 2018-10-12 Last updated: 2022-02-26Bibliographically approved
In thesis
1. Essays on Insider Trading and Initial Public Offerings
Open this publication in new window or tab >>Essays on Insider Trading and Initial Public Offerings
2018 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

   This thesis consists of four self-standing articles on insider trading, initial public offerings and delisting of corporate firms.

   The first paper in this thesis investigates whether insiders, in an asymmetric information environment, manipulate the earnings of a firm to influence investors’ perceptions of firm value in order to benefit from their trades. The main finding of this paper is a positive association between accrual-based earnings management and sell-dominated insider trading given the existence of asymmetric information. We find a leading role for information asymmetry and its interaction effect on the relationship between insider trading and discretionary accrual proxies.

   The second paper examines the opportunistic trading behavior of core insiders compared with non-core ones. We document that although both core and non-core insiders are equally motivated by contrarian beliefs, their motivational difference in opportunistic trading is primarily connected to preferential and favored access to superior private information.

   The third paper investigates the role underwriters play in initial public offerings on Mondays. Our evidence suggests that underwriters are reluctant to take firms public on Mondays, as they face uncertainty about pricing the IPOs due to the lack of information and a greater risk of not being able to sell stocks at the offer price, thus losing money. However, they bring IPOs on Mondays, as they are sufficiently underpriced to minimize their risks.

   The fourth paper investigates the roles of institutional investors and insiders in the delisting of firms – an important corporate event. Our analysis reveals that institutional holdings have a negative effect on a firm’s probability of being delisted within five years after the IPO. We also find that insider purchases have a negative effect and insider sales have a positive effect on the probability of delisting. Our result further shows that the probability of delisting decreases if firms’ insiders increase their holdings.

Place, publisher, year, edition, pages
Stockholm: Stockholm Business School, Stockholm University, 2018. p. 15
Keywords
Insider trading, Discretionary accruals, Information asymmetry, Opportunistic trades, Contrarian beliefs, Superior information, Monday IPOs, Underwriters, Institutional holdings, Delisting, Distance to default
National Category
Business Administration
Research subject
Business Administration
Identifiers
urn:nbn:se:su:diva-160942 (URN)978-91-7797-454-3 (ISBN)978-91-7797-455-0 (ISBN)
Public defence
2018-11-29, Gröjersalen, hus 3, Kräftriket, Roslagsvägen 101, Stockholm, 13:00 (English)
Opponent
Supervisors
Note

At the time of the doctoral defense, the following papers were unpublished and had a status as follows: Paper 2: Manuscript. Paper 3: Manuscript. Paper 4: Manuscript.

Available from: 2018-11-06 Created: 2018-10-12 Last updated: 2022-02-26Bibliographically approved

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Chowdhury, AbuMollah, Sabur

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