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| Author | : Christopher Francis Noe |
| Publisher | : |
| Total Pages | : 168 |
| Release | : 1996 |
| Genre | : Business forecasting |
| ISBN | : |
| Author | : Afshad J. Irani |
| Publisher | : |
| Total Pages | : 28 |
| Release | : 2001 |
| Genre | : |
| ISBN | : |
This study investigates the association between bias in earnings forecasts released by managers of financially distressed firms and subsequent insider trading. Prior studies have documented optimism in such forecasts. Given this finding, this study investigates whether this optimism is systematically related to opportunistic management behavior or a sincere belief (by management) that their firm's financial situation is going to get better. Abnormal insider trading in the post management forecast period is examined to test these alternative explanations. The findings for the full sample are consistent with the opportunistic view, however the trading activity of non-managerial insiders seems to be the primary driver.
| Author | : Garen Markarian |
| Publisher | : VDM Publishing |
| Total Pages | : 164 |
| Release | : 2008 |
| Genre | : Business & Economics |
| ISBN | : 9783836473958 |
For at least two decades, it was believed that making managers into owners could ameliorate many agency conflicts existing in capital markets settings. In fact, it now appears that managerial ownership of stock itself may encourage earnings manipulations. In this study, we show that CEO insider trading, earnings manipulations, and the ability to meet and exceed market benchmarks are all interrelated. Managers manipulate earnings to exceed analyst earnings forecasts. Additionally, managerial insider selling increases with performance relative to analyst forecasts, and is magnified by stock option holdings. Insider selling is more intense among managers who have used earnings manipulations to exceed forecasts. Additionally, managers who sell following the announcement of an earnings surprise are able to earn abnormal profits. Firms having both positive earnings surprises and insider selling exhibit lower subsequent accounting performance. This study is of interest to academics, practitioners who are interested in the finer mechanisms of markets, and advanced finance students, alike.
| Author | : Anastasia Kraft |
| Publisher | : |
| Total Pages | : |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
We investigate whether senior officers use accrual-based earnings management to meet voluntary earnings disclosure (i.e., management earnings forecasts) before selling or buying their own shares when they have private information. This study is the first to use the differences in timing of trades by senior officers and other insiders (e.g., directors or large shareholders) to infer information asymmetry. We hypothesize that the timing of senior officers' trades with no other insiders' trades at the same time indicates opportunistic trades and asymmetric information between senior officers and other insiders. Our results show that senior officers' exclusive sales are negatively associated with future returns, indicating that they tend to use insider information. Moreover, senior officers are more likely to meet their earnings forecasts when they plan to sell stocks.
| Author | : Eric W. Typpo |
| Publisher | : |
| Total Pages | : 222 |
| Release | : 1994 |
| Genre | : Insider trading in securities |
| ISBN | : |
| Author | : Garen Markarian |
| Publisher | : |
| Total Pages | : 155 |
| Release | : 2005 |
| Genre | : |
| ISBN | : |
| Author | : Xin Wang |
| Publisher | : |
| Total Pages | : 298 |
| Release | : 2006 |
| Genre | : Business analysts |
| ISBN | : |
| Author | : Messod D. Beneish |
| Publisher | : |
| Total Pages | : 52 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
This paper evaluates two hypotheses about the relation between insider selling and earnings management in periods preceding poor corporate performance. Consistent with our litigation avoidance hypothesis, we provide evidence that managers manage earnings upwards after they have engaged in abnormally high levels of insider selling. In contrast, we find no support for the pump and dump hypothesis of earnings being managed before managers sell their equity. Our findings indicate insider trading provides managers with incentives to subsequently manage earnings upward, to distance their selling from the revelation of bad news and reduce the likelihood of reputation, employment, and litigation losses. We show these incentives co-exist and complement incentives to avoid default in a sample of 462 firms that experience technical default in 1983-1997. Our findings suggest that investors and those with oversight authority (e.g., boards of directors, auditors, and regulators) consider monitoring prior rather than contemporaneous insider-trading activity as a part of their corporate governance practices.
| Author | : H. Nejat Seyhun |
| Publisher | : MIT Press |
| Total Pages | : 452 |
| Release | : 2000-02-28 |
| Genre | : Business & Economics |
| ISBN | : 9780262692342 |
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.
| Author | : Malek El Diri |
| Publisher | : Springer |
| Total Pages | : 120 |
| Release | : 2017-08-20 |
| Genre | : Business & Economics |
| ISBN | : 3319626868 |
This book provides researchers and scholars with a comprehensive and up-to-date analysis of earnings management theory and literature. While it raises new questions for future research, the book can be also helpful to other parties who rely on financial reporting in making decisions like regulators, policy makers, shareholders, investors, and gatekeepers e.g., auditors and analysts. The book summarizes the existing literature and provides insight into new areas of research such as the differences between earnings management, fraud, earnings quality, impression management, and expectation management; the trade-off between earnings management activities; the special measures of earnings management; and the classification of earnings management motives based on a comprehensive theoretical framework.
