Insider Trading and Stock Prices

Manouchehr Tavakoli, David Gordon McMillan, Phil McKnight

Research output: Contribution to journalArticlepeer-review

17 Citations (Scopus)


We examine the informational content of insider trades and its value to market investors using a US dataset. Overall, our results support the view that insider actions have positive predictive power for future returns. However, these results may come with some caveats. First, it is not the actions of all insiders (directors, officers and large shareholders) that have predictive power for future returns, but typically only those of directors and officers (senior management). Second, while director actions have predictive power for firm of all sizes, officers only have predictive power for small firms. The signal emanating from buys is stronger than the signal emanating from sells. Finally, the trading actions of directors, and to a lesser extent, officers have significant effects on the trading behaviour of other groups of insiders.
Original languageEnglish
Pages (from-to)254-266
JournalInternational Review of Economics and Finance
Issue number1
Early online date15 Nov 2011
Publication statusPublished - Apr 2012


Dive into the research topics of 'Insider Trading and Stock Prices'. Together they form a unique fingerprint.

Cite this