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Earnings Valuation and Insider Trading

Earnings Valuation and Insider Trading
Author: Wen Yu
Publisher:
Total Pages: 0
Release: 2008
Genre:
ISBN:

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This study explores insider trading as a function of differences between managers' and the market's assessment of company earning components - specifically operating cash flows and accruals. It extends prior research by more comprehensively studying earnings components. It also builds a perspective of managers as sophisticated investors who, while engaging in earnings management, ultimately make insider trading decisions based on the divergence between their private valuation of earnings components and the market's. Thus managers may, seemingly counter-intuitively, engage in income-increasing earnings management and insider buying in the same period. Using 4,357 recent firm - years of observations, we find strong evidence that insider buying, but not selling, behavior is consistent with managerial insider trading based on a market valuation divergence of both operating cash flows and accruals, rather than on either element individually, or on managers' use of accounting discretion. We apply the methodological framework of the Mishkin (1983) test to address the hypothesis above. In particular, we assess the relations involving market pricing and characteristics of company earnings and insider trading as these relate to the fundamental idea of market valuation divergence.


Investment Intelligence from Insider Trading

Investment Intelligence from Insider Trading
Author: H. Nejat Seyhun
Publisher: MIT Press
Total Pages: 452
Release: 2000-02-28
Genre: Business & Economics
ISBN: 9780262692342

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Learn how to profit from information about insider trading. The term insider trading refers to the stock transactions of the officers, directors, and large shareholders of a firm. Many investors believe that corporate insiders, informed about their firms' prospects, buy and sell their own firm's stock at favorable times, reaping significant profits. Given the extra costs and risks of an active trading strategy, the key question for stock market investors is whether the publicly available insider-trading information can help them to outperform a simple passive index fund. Basing his insights on an exhaustive data set that captures information on all reported insider trading in all publicly held firms over the past twenty-one years—over one million transactions!—H. Nejat Seyhun shows how investors can use insider information to their advantage. He documents the magnitude and duration of the stock price movements following insider trading, determinants of insiders' profits, and the risks associated with imitating insider trading. He looks at the likely performance of individual firms and of the overall stock market, and compares the value of what one can learn from insider trading with commonly used measures of value such as price-earnings ratio, book-to-market ratio, and dividend yield.


Insider Trading and Earnings Management

Insider Trading and Earnings Management
Author: Julia Sawicki
Publisher:
Total Pages:
Release: 2007
Genre:
ISBN:

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This paper analyzes the relationship between earnings management and insider trading, specifically investigating whether discretionary accruals are related to insider trading and valuation. We find strong evidence of insiders managing earnings downward when buying and managing earnings upward when selling. On the marginal basis, value (high book-to-market value) firms manage their earnings upward compared to growth (low book-to-market value) firms, consistent with a signaling hypothesis. However the opposite is true on the average basis, consistent with an opportunistic hypothesis.


Equity Markets, Valuation, and Analysis

Equity Markets, Valuation, and Analysis
Author: H. Kent Baker
Publisher: John Wiley & Sons
Total Pages: 448
Release: 2020-09-01
Genre: Business & Economics
ISBN: 1119632935

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Sharpen your understanding of the financial markets with this incisive volume Equity Markets, Valuation, and Analysis brings together many of the leading practitioner and academic voices in finance to produce a comprehensive and empirical examination of equity markets. Masterfully written and edited by experts in the field, Equity Markets, Valuation, and Analysis introduces the basic concepts and applications that govern the area before moving on to increasingly intricate treatments of sub-fields and market trends. The book includes in-depth coverage of subjects including: · The latest trends and research from across the globe · The controversial issues facing the field of valuation and the future outlook for the field · Empirical evidence and research on equity markets · How investment professionals analyze and manage equity portfolios This book balances its comprehensive discussion of the empirical foundations of equity markets with the perspectives of financial experts. It is ideal for professional investors, financial analysts, and undergraduate and graduate students in finance.


Earnings Management and Insider Trading Around Seasoned Equity Offerings

Earnings Management and Insider Trading Around Seasoned Equity Offerings
Author: Loretta Nartekie Baryeh
Publisher:
Total Pages: 164
Release: 2008
Genre: Capital investments
ISBN:

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Given the information asymmetry between insiders and investors involved in SEO regarding the firm's plans on how to invest the proceeds from the SEO and the consequent effect on firm's value, insiders have an opportunity to engage in profitable insider trading. This, in turn, provides the market with a signal on firm's intentions. In this study, I examine a sample of 1555 firms that conducted SEOs in the 1987 to 2005 period and their insiders' trading pattern. I find that firms engage in aggressive earnings management to inflate reported earnings. Insiders of SEO firms exhibit the contrarian pattern of trading as shown by my findings of upwards earnings management for value firms. The market is aware of the importance of the insider trading signal. Still, insider trading patterns before and after the SEO year suggest that the market is unable to value the firm correctly. The Sarbanes-Oxley Act of 2002 decreased the scope of earnings management by SEO firms.-- Abstract.


The Little Book of Stock Market Profits

The Little Book of Stock Market Profits
Author: Mitch Zacks
Publisher: John Wiley & Sons
Total Pages: 224
Release: 2011-10-19
Genre: Business & Economics
ISBN: 1118192419

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A timely guide to making the best investment strategies even better A wide variety of strategies have been identified over the years, which purportedly outperform the stock market. Some of these include buying undervalued stocks while others rely on technical analysis techniques. It's fair to say no one method is fool proof and most go through both up and down periods. The challenge for an investor is picking the right method at the right time. The Little Book of Stock Market Profits shows you how to achieve this elusive goal and make the most of your time in today's markets. Written by Mitch Zacks, Senior Portfolio Manager of Zacks Investment Management, this latest title in the Little Book series reveals stock market strategies that really work and then shows you how they can be made even better. It skillfully highlights earnings-based investing strategies, the hallmark of the Zacks process, but it also identifies strategies based on valuations, seasonal patterns and price momentum. Specifically, the book: Identifies stock market investment strategies that work, those that don't, and what it takes for an individual investor to truly succeed in today's dynamic market Discusses how the performance of each strategy examined can be improved by combining into them into a multifactor approach Gives investors a clear path to integrating the best investment strategies of all time into their own personal portfolio Investing can be difficult, but with the right strategies you can improve your overall performance. The Little book of Stock Market Profits will show you how.


Enforcement Manual

Enforcement Manual
Author: United States. Securities and Exchange Commission. Division of Enforcement
Publisher:
Total Pages: 144
Release: 2008
Genre: Corporation law
ISBN:

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Managerial Opportunism and Earnings Surprise: An Investigation of Insider Trading and Perceived Market Valuation Divergence

Managerial Opportunism and Earnings Surprise: An Investigation of Insider Trading and Perceived Market Valuation Divergence
Author: Wen Yu
Publisher:
Total Pages: 111
Release: 2007
Genre:
ISBN:

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The results of this study indicate managerial opportunism. When the market does not fully assess the valuation implication of accounting accruals, managerial insider trading (broadly conceived to include open market transactions and unscheduled stock-option grants) corresponds to buying or selling behavior associated with managers' private accounting information and the direction of market valuation divergence.


The Insider's Dossier

The Insider's Dossier
Author: Andrew Packer
Publisher: Humanix Books
Total Pages: 92
Release: 2014-04-22
Genre: Business & Economics
ISBN: 1630060216

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The Insider's Dossier will seamlessly guide you through investing alongside those most in-the-know professionals, debunking the widespread myth that insider trading is illegal. Not only is it legal when following proper protocol, but author Andrew Packer helps you to decode the Wall Street lingo, so that even the novice could easily follow corporate insiders for returns that significantly outperform the market year over year. In easy-to-understand terms, Packer describes: The difference between legal and illegal insider trading How to evaluate insider activity in order to optimize your investment advantage The key to swiftly decoding SEC filing forms for the latest insider activity Understanding and utilizing web-based technical analysis tool How to separate key insiders from the average corporate investor Investing beyond simple trades, clearly and concisely explaining the ins and outs of options trading, and much more. . .


Wall Street's Insiders

Wall Street's Insiders
Author: John C. Boland
Publisher:
Total Pages: 238
Release: 1985
Genre: Insider trading in securities
ISBN:

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