Market conditions, governance and the information content of insider trades1. Issue 1 (13th October 2014)

• Record Type: Journal Article
• Authors: Bhabra, Harjeet S.; Hossain, Ashrafee T.
• Is Part Of: Review of financial economics. Volume 24:Issue 1(2015)
• Page Start: 1
• Page End: 11
• Publication Date: 2014-10-13
• Subjects: Regulations -- SOX -- Insider trades -- Information asymmetry -- Corporate governance; G14 -- G30 -- G38; Business -- Periodicals; Economics -- Periodicals; Business; Economics; Electronic journals; Periodicals; 332.05
• DOI: 10.1016/j.rfe.2014.10.001
• Languages: English
• ISSNs: 1058-3300

Abstract

Abstract: We examine the information content of Form‐4 filings following extreme market downturns in the pre and post‐Sarbanes–Oxley‐Act (SOX) periods. We find that the announcement period abnormal returns under extreme market conditions are larger and this effect is stronger in the more tighter disclosure rules in the post‐SOX period. Insider rank, corporate governance and proxies for information asymmetry are significantly related to the abnormal returns around the filing date. Overall, our results show that the more timely filing requirement introduced by SOX has been particularly beneficial for investors in firms with higher levels of information asymmetry, poor governance and during market downturns.