Faculty Scholarly Dissemination Grants

Title

Do Insiders Actually Earn Abnormal Returns in the Long-Run?

Department

Finance Department

College

Seidman College of Business

Disciplines

Business

Abstract

Numerous studies to date have addressed short-term returns earned by insiders with mixed results. Longer-term performance of executives and directors, however, has not been addressed in the literature. In this paper, we shed light on whether insiders actually earn abnormal returns in the long-run by deriving a more accurate and comprehensive measure of insiders realized returns. Key results from insiders dollar-weighted returns, which explicitly account for capital flow timing and magnitude from all SEC-reported insider transaction, show that insiders fail to earn significant returns in their overall portfolio during their tenure with the firm.

Conference Name

Financial Management Association

Conference Location

Atlanta, Georgia

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