Insider Trading around Dividend Announcements: Theory and Evidence
1991; Wiley; Volume: 46; Issue: 4 Linguagem: Inglês
10.2307/2328862
ISSN1540-6261
Autores Tópico(s)Financial Reporting and Valuation Research
ResumoThe Journal of FinanceVolume 46, Issue 4 p. 1361-1389 Article Insider Trading around Dividend Announcements: Theory and Evidence KOSE JOHN, KOSE JOHNSearch for more papers by this authorLARRY H. P. LANG, LARRY H. P. LANGProfessor of Finance and Assistant Professor of Finance, respectively, at the New York University Stern School of Business, New York. Helpful comments from Warren Bailey, Ernest Bloch, Aswath Damodaran, Franklin Allen, Kathleen Hagerty, Merton Miller, Banikanta Mishra, David Nachman, and Jayaraman Narayanan are acknowledged. For detailed comments and suggestions on earlier drafts, we thank an anonymous referee and René Stulz, editor of the Journal. Kose John received financial support from a Yamaichi Faculty Fellowship and a New York University Summer Research Grant. Part of this research was conducted when Kose John was a Visiting Professor at the Graduate School of Business, University of Chicago, and Larry Lang was a Visiting Assistant Professor at the College of Business, The Ohio State University.Search for more papers by this author KOSE JOHN, KOSE JOHNSearch for more papers by this authorLARRY H. P. LANG, LARRY H. P. LANGProfessor of Finance and Assistant Professor of Finance, respectively, at the New York University Stern School of Business, New York. Helpful comments from Warren Bailey, Ernest Bloch, Aswath Damodaran, Franklin Allen, Kathleen Hagerty, Merton Miller, Banikanta Mishra, David Nachman, and Jayaraman Narayanan are acknowledged. For detailed comments and suggestions on earlier drafts, we thank an anonymous referee and René Stulz, editor of the Journal. Kose John received financial support from a Yamaichi Faculty Fellowship and a New York University Summer Research Grant. Part of this research was conducted when Kose John was a Visiting Professor at the Graduate School of Business, University of Chicago, and Larry Lang was a Visiting Assistant Professor at the College of Business, The Ohio State University.Search for more papers by this author First published: September 1991 https://doi.org/10.1111/j.1540-6261.1991.tb04621.xCitations: 175 Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat ABSTRACT The informational role of strategic insider trading around corporate dividend announcements is studied based on the efficient equilibrium in a signalling model with endogenous insider trading. Insider trading immediately prior to the announcement of dividend initiations has significant explanatory power. For firms with insider selling prior to the dividend initiation announcement, the excess returns are negative and significantly lower than for the remaining firms (with no insider trading or just insider buying) as implied by our model. Another implication is that dividend increases may elicit a positive or negative stock price response depending on the firm's investment opportunities. REFERENCES Aharony, J. and I. Swary, 1980, Quarterly dividend and earnings announcement and stockholders' returns: An empirical analysis, Journal of Finance 35, 1–12. Ambarish, R., K. John, and J. 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