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| Author: | Piotroski, J. D. Roulstone, D. T. |
| Title: | Do insider trades reflect both contrarian beliefs and superior knowledge about future cash flow realizations? |
| Journal: | Journal of Accounting & Economics
2005 : FEB, VOL. 39:1, p. 55-81 |
| Index terms: | capital markets cash flow earnings insider trading |
| Language: | eng |
| Abstract: | This paper argues that insiders are both contrarians and possessors of superior information. It is found that insider trades are positively related to the firm's future earnings performance, positively related to the firm's book-to-market ratio and inversely related to recent returns. Each relation has incremental explanatory power, yet information about future cash flow changes explains a smaller portion of insider purchases than do proxies for security misvaluation. |
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