Dissecting the Relation Between Insider and Institutional Trading


Book Description

This dissertation consists of two essays. In the first essay, we examined the relation between insider trades and institution demand. The literature documents a strong inverse relation between insider trading and institutional demand, suggesting that institutions provide liquidity for insider trading. Motivated by empirical evidence that there is considerable variation of informativeness among institutions and insiders, this paper further examines the relation between insider trading and institutional trading by classifying insiders as opportunistic vs. routine traders and institutions as short-term vs. long-term investors. We find that the inverse relation between insider trading and institutional demand is mainly driven by long-term institutions. In fact, short-term institutions tend to trade in the same direction as opportunistic insiders whose trades are more informative of future stock price changes. The results are stronger for trades on small cap stocks. Further separating officers and directors vs. other insiders, we show that our findings are driven primarily by trades from opportunistic officers and directors.




Insider Trades and Demand by Institutional and Individual Investors


Book Description

There is a strong inverse relation between insider trading and institutional demand the same quarter and over the previous year. Our analysis suggests a combination of factors contribute to this relation. First, institutional investors are more likely to provide the liquidity necessary for insiders to trade. Second, insiders are more likely to buy low valuation and low lag return stocks while institutions are attracted to the opposite security characteristics. Last, the results are consistent with the hypothesis that insiders are more likely to view their securities as overvalued following a period when institutions were net buyers and undervalued following a period when institutions were net sellers.




Dissecting Fortune and Woe from Insider Trading


Book Description

This dissertation examines three unanswered research questions that contribute to the understanding of informational role of corporate insiders for financial markets. In the first chapter, I examine whether celebrity or star status of a chief executive officer(CEO) affects the informativeness of his trades. In the second chapter, I test the relationship between aggregate insider trades and corporate bond rating. In the final chapter, I investigate the insider trading behavior of narcissistic CEOs. Overall, my findings support the notion that equity trades executed by corporate insiders possess useful information that could be potentially exploited by the noise traders.




Profit from Legal Insider Trading


Book Description

Insider expert Jonathan Moreland tells readers exactly what insider information is, where to find it, and how to use it. In these pages, he covers how to analyze insider purchases and sales; the difference between legal and illegal insider trading; special screens of insider data for use with specific investment approaches; and where to find the cheapest and best insider data.




Institutional Ownership and Insider Trading


Book Description

We examine the causal effect of institutional ownership on insider trading using a regression discontinuity design to analyze exogenous differences in institutional ownership around Russell Index reconstitutions. Our findings indicate institutional investors influence insider trading behavior. Higher institutional ownership leads to fewer insider trades overall (both buys and sells) and less profitable sell trades. Further analyses indicate the reductions in trading frequency are concentrated in opportunistic, as opposed to routine, insider trades. Our findings differ from those in prior literature, which likely suffers from endogeneity issues. We also provide evidence on one potential mechanism through which institutions' preferences on insider trading are instituted. We find firms with higher levels of institutional ownership are significantly more likely to have and/or more strictly enforce blackout policies, which limit trades by insiders to certain periods. These findings provide new insights on how institutional investors function as external monitors. Overall, our results suggest institutions generally view privately informed insider trading as undesirable and use their influence to mitigate it.







TradeStream Your Way to Profits


Book Description

An innovative guide to using social networking for successful investing There is no doubt that the emergence of social media has taken over the Internet landscape. The remarkable growth of Facebook and Twitter has forced everyone-including investors-to take notice. This book explains how to use social marketing to pick and evaluate stocks. Author Zack Miller embodies the nexus between asset management, equity research, and new Internet distribution technologies. As an asset manager, he writes extensively about the changes and opportunities in online finance for investors, financial advisors, and investor relations professionals-and with this new book, he'll show you how to use social media to profit like the pros. You'll learn how to Invest for the long term utilizing streaming information, guru tips, and many other tools found in the world of financial social media Glean tips from experts in this growing field Use new tools to sort through the mounds of data currently available and make sense of it all The Internet has created totally new models and methods for researching investments. TradeStream Your Way to Profits explores these changes and explains how you can take advantage of these opportunities to make better, more profitable investment decisions.




The Handbook of Electronic Trading


Book Description

This book provides a comprehensive look at the challenges of keeping up with liquidity needs and technology advancements. It is also a sourcebook for understandable, practical solutions on trading and technology.




Efficiency and Anomalies in Stock Markets


Book Description

The Efficient Market Hypothesis believes that it is impossible for an investor to outperform the market because all available information is already built into stock prices. However, some anomalies could persist in stock markets while some other anomalies could appear, disappear and re-appear again without any warning. A Special Issue on "Efficiency and Anomalies in Stock Markets" will be devoted to advancements in the theoretical development of market efficiency and anomaly in the Stock Market, as well as applications in Stock Market efficiency and anomalies.




Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance


Book Description

This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies. The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.