ABSTRACT
We examine the relation between insidersâ investment horizon and the information content of their trades with respect to future stock returns. We conjecture that an insider's investment horizon establishes a benchmark for expected patterns of continued trading behavior and thus helps identify unexpected insider trades, which should be more informative in efficient markets. Consistent with this conjecture, the trades of shortâhorizon insiders are both more unexpected and more informed, on average, than those of longâhorizon insiders. Shortâhorizon insiders and their firms also tend to display characteristics that are associated with a greater focus on shortâtermism.
This article is protected by copyright. All rights reserved