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This paper aims to examine the behavioral timing hypothesis in the context of UK rights issues by seeking to establish and investigate inter-relationships between directors’ trading around rights issues as a proxy for stock mis-valuation and post-issue stock price performance.

The cumulative average abnormal returns, the buy and hold abnormal returns, the standardized residual cross-sectional t-test and the generalized sign test techniques.

The directors do possess short-term timing ability as they can identify profitable trading situations by buying more often before stock outperformance and by selling more often before stock underperformance. In addition, directors trading prior to the rights offering is found to exert an influence on the long-run abnormal returns of the rights-issuing firm, which supports the story that mis-valuation and behavioral timing are empirical.

Other types of seasoned equity offerings rather than rights issues should be included.

The research provides a direct testing for the strong form of market efficiency hypothesis, which enables policymakers to take into account market reaction to directors’ trades and how it is affected by corporate events (e.g. rights issues) when addressing insider trading regulations.

This study extends available literature in the context of both developed and emerging equity markets to testing the behavioral timing hypothesis by testing the inter-relationships between directors’ trading around rights issues and post-issue short- and long-run performance. To the best of the author’s knowledge, this is the first study that examines these inter-relationships in the UK context.

Previous literature suggests various motives and factors affecting insider trading, but little systematic empirical evidence exists on how they affect insider trading decisions jointly. The purpose of this paper is to address this issue.

This study adopts a multivariate fix‐effect framework to jointly examine the factors affecting insider trading decisions using a sample of directors serving multiple companies. The timing of the trading is taken as given and an examination made as to why a specific stock was traded among all the insider stocks the director holds. The observations of the untraded stocks supplement the direct observation of the traded stocks, and allow the issue of insider trading motives to be tested in a multivariate framework with director fix‐effect.

Evidence is found for the joint presence of the following motives in determining directors' trading choices: information; insider preferences for small value companies with significant previous price movement; the avoidance of information sensitive period; and corporate‐level insider trading restrictions. It is empirically shown that director trading motives vary by transaction size.

This paper provides systematic empirical evidence on the factors affecting the trading decisions of US directors.

The purpose of this paper is to investigate the impact of insider trading on subsequent stock returns in the UK, with a specific focus on the impact of the global financial crisis of 2007-2008 on the relation between CEO and CFO stock purchases and returns.

The empirical analysis uses 10,230 purchases executed in 679 UK firms by 1,477 directors during the period from 2000 to 2010. Subsequent market-adjusted stock returns are regressed on a set of firm-specific accounting, market and corporate governance variables as well as the characteristics of CEOs and CFOs. Additionally, the analysis distinguishes between the opportunistic and routine trades.

The findings reveal that the position of the trading director and the nature of their trades are important in determining the impact on returns of insider trades. In particular, CEO purchases are on the whole more informative than CFO purchases and opportunistic purchases. The trades in the post-crisis period have a greater impact on subsequent stock returns.

The empirical analysis is limited to the trades made by two executives. Future research should consider inside trades by all directors and distinguish between executive and non-executive directors. Also, a behavioral measure should be developed to test if the financial crisis affected the trading behavior of directors and whether directors use insider trading strategically to signal information to the market.

The impact of directors’ dealings on stock returns is not homogeneous. Financial analysts and investors should pay more attention to different types of trades and the identity of trading director.

This paper, to the authors’ knowledge, provides the first attempt that combines in the same framework the identity and personal attributes of trading executive directors, firm-level corporate governance features, the nature of purchase transactions and the trading period characteristics. Furthermore the empirical analysis is carried out during a period that also covers the recent global financial crisis period and its immediate aftermath.

The purpose of this chapter is to establish whether director trades provide information to investors about the future prospects of the company they form part of and thus reduce the information asymmetry beyond what is already conveyed in the financial statements.

Director Dealings were dealt with as an investment strategy by looking at past transactions of directors executed between January 2005 and December 2014 on the Malta Stock Exchange (MSE) and evaluating whether there was an increase in returns for investors who copy director trades. The study focused on whether short-term abnormal returns for up to 12 months after the transaction date, being either a buy or a sale, were made by directors in Malta when trading in their own companies.

The results show that in the short-term period of up to 12 months after the transaction date, Maltese directors do transmit information to the market both when they purchase shares in their own companies and also when they sell shares. The interesting fact about the study is that in Malta sale transactions are more valuable to the outsiders than purchase transactions. Apart from this, the results also show that some companies which are listed on the MSE are more indicative as to their future performance than others. It was ultimately concluded that even though there are informational asymmetries between directors in a company and outsiders, an outsider cannot trade solely by following director trades. The implications of the findings are discussed.

This study attempts to determine the level of significance that each insider trade has on the Maltese market, what each director trade conveys to the said market and if these trades are valuable to the outside investors even though such investors do not have knowledge of the grounds upon which the directors trade.

The purpose of this paper is to investigate the extent of directors breaching the reporting requirements of the Australian Stock Exchange (ASX) and the Corporations Act in Australia. Further, it seeks to assess whether directors in Australia achieve abnormal returns from trades in their own companies.

Using an event study approach on an Australian sample, abnormal returns for a range of situations were estimated.

A total of 13 (seven) per cent of own‐company directors trades do not meet the ASX (Corporations Act) requirement of reporting within five (14) business days. Directors do achieve abnormal returns through trading in shares of their own companies. Ignoring transaction costs, outsiders can achieve abnormal returns by imitating directors' trades. Analysis of returns to directors after they trade but before they announce the trade to the market shows that directors are making small but statistically significant returns that are not available to the market. Analysis of returns to directors subsequent to the ASX reporting requirement up to the day the trade is reported shows that directors are making small but statistically significant returns that should be available to the market.

Future research should investigate the linkages between late reporting by directors and disadvantages to outside shareholders and the implementation of internal policies implemented to mitigate insider trading.

Market participants should remain vigilant regarding the potential for late/non‐reporting of directors' trades.

Uncovering breaches of reporting regulations are particularly important given that directors tend to purchase (sell) shares when the price is low (high), thereby achieving abnormal returns.

This study aims to examine the extent to which UK directors failed to report their share trading in the timeframe required by extant regulations in the run‐up to the changes in insider trading law contained in the Financial Services and Markets Act.

The study investigates the extent of non‐compliance amongst the 7,461 trades reported to the London Stock Exchange by the directors of UK firms in the year 2000.

The results indicate that 1,055 (or 14 per cent) of directors' trades were reported late (or with the transaction date absent), with these being concentrated amongst “buy” transactions in both absolute and pro‐rata terms.

The evidence suggests that non‐compliance in the reporting of directors' transactions was common at the time when UK authorities chose to toughen the legal framework governing the conduct of trading based on private price‐sensitive information. Once sufficient time has elapsed, further studies should be able to provide evidence about the iterative impact of the new legal framework by comparing results with the findings of this study.

This is the first study to report a detailed examination of the extent of non‐compliance in the timing of directors' trades in their own equity.

This paper aims to address the question of whether acquiring firm directors trading, prior to a merger or acquisition (M&A) announcement, predicts the share market reaction on M&A announcement.

Event studies and cross-section regression were used in this analysis.

This paper finds that acquiring firms with no director trading and firms with net director purchases in the 12 months prior to the M&A announcement earn positive abnormal returns. It is also found that share market reaction to M&A announcements is considerably larger for acquiring firms whose directors do not trade relative to those companies with directors who do trade over the prior 12 months. This director non-trading result is further born out in regression analysis.

The absence of pre-M&A announcement director trading could reflect lower agency costs for the acquiring firm and this might explain to stronger announcement day effect for this group of firms.

The fact that directors choose not to trade in their shares prior to a M&A transaction appears to be viewed as good news by the market.

Director trading is value relevant for the acquiring firm and so it is critical that director trading is transparent.

To the best of the authors' knowledge, this question has not been addressed in the literature before, particularly the finding for firms with no director trading in the period prior to the M&A announcement.

The purpose of this paper is to examine the impact of female board membership on the profitability of corporate insider purchases.

The authors use a classic event study approach. They measure abnormal returns around the insider purchase events, and analyze the cross-sectional variation of this market impact in terms of female board membership, controlling for a range of other factors.

The authors find a strong positive market reaction in the aggregated data, and after decomposing transactions according to gender, they find that the profitability of female directors is statistically indistinguishable from their male counterparts. Additionally, they find evidence that with more females sitting on the board, the profitability of the male directors decreases but the profitability of their female counterparts does not.

The authors’ findings suggest that having females on the board increases corporate governance of male directors. The results also suggest that female directors are no less inclined to exploit the asymmetric information advantage provided by board membership.

The Bureau of Economics in the Federal Trade Commission has a three-part role in the Agency and the strength of its functions changed over time depending on the preferences and ideology of the FTC’s leaders, developments in the field of economics, and the tenor of the times. The over-riding current role is to provide well considered, unbiased economic advice regarding antitrust and consumer protection law enforcement cases to the legal staff and the Commission. The second role, which long ago was primary, is to provide reports on investigations of various industries to the public and public officials. This role was more recently called research or “policy R&D”. A third role is to advocate for competition and markets both domestically and internationally. As a practical matter, the provision of economic advice to the FTC and to the legal staff has required that the economists wear “two hats,” helping the legal staff investigate cases and provide evidence to support law enforcement cases while also providing advice to the legal bureaus and to the Commission on which cases to pursue (thus providing “a second set of eyes” to evaluate cases). There is sometimes a tension in those functions because building a case is not the same as evaluating a case. Economists and the Bureau of Economics have provided such services to the FTC for over 100 years proving that a sub-organization can survive while playing roles that sometimes conflict. Such a life is not, however, always easy or fun.

Improved creditor and community protection seemed attainable goals when Professor Daniel Prentice described s. 214 of the Insolvency Act (‘s. 214’) as ‘one of the most important developments in company law this century’. The profession and academics perceived that wrongful trading in its legislative form had a bright future because it promised to provide much needed protection. ‘Wrongful trading’ was introduced to minimise the abuse of limited liability by company officers. An honest director could not be liable for a company's debt despite reckless, unreasonable and cavalier business practices. Insolvency practitioners were having difficulty establishing dishonesty under the fraudulent trading provisions. The courts demanded a strict standard of proof for fraudulent trading and many cases never made it to court despite a prospect of recovery against directors. Wrongful trading by comparison is a recent development that, in theory, refines the standard of a director's duty and clarifies that conduct need not be fraudulent, illegal or unconscionable to attract legislative censure. Section 214 measures a director's conduct against a minimum standard of commercial morality and competence.