search query: @indexterm Insider trading / total: 155
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| Author: | Beneish, M. D. Vargus, M. E. |
| Title: | Insider Trading, Earnings Quality, and Accrual Mispricing |
| Journal: | Accounting Review
2002 : OCT, VOL. 77:4, p. 755-792 |
| Index terms: | PRICING TRADE INSIDER TRADING EARNINGS QUALITY |
| Language: | eng |
| Abstract: | This paper investigates whether insider trading is informative about earnings quality and the valuation implications of accruals. The authors show that (1) the one-year-ahead persistence of income-increasing accruals is significantly lower when accompanied by abnormal insider selling and greater when accompanied by abnormal insider buying; (2) the accrual mispricing phenomenon observed in previous work is due to the mispricing of income-increasing accruals; (3) one-year- ahead hedge returns to trading strategies based on the direction of accruals and insider trading significantly exceed those based on accruals alone; and (4) the lower persistence of income-increasing accruals accompanied by abnormal insider selling appears to be at least partly attributable to opportunistic earnings management. |
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