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Insider Trading Activities Before the Simultaneous Announcements of Earnings and Dividends

Louis T. W. Cheng

School of Accounting and Finance, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China

Corresponding author.

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Ricky W. F. Szeto

Department of Business Administration, Hong Kong Shue Yan College, Braemar Hill, North Point, Hong Kong, China

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, and

T. Y. Leung

Department of Accountancy, Hong Kong Shue Yan College, Braemar Hill, North Point, Hong Kong, China

Department of Accountancy, City University of Hong Kong, Hong Kong, China

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https://doi.org/10.1142/S0219091505000385Cited by:5 (Source: Crossref)

Abstract

We employ a sample of 3,177 events from Hong Kong industrial firms during the 1993–1999 period to examine insider trading activities around earnings and dividends announcements. By controlling for earnings management, special dividends, and other firm level financial indicators, we find that the presence of insider trading, its trading direction, and its trading intensity are related to the signals of these simultaneous earnings and dividends announcements. Various tests show that our findings are robust regardless of the proxies used for measuring insider trading activities, earnings, and dividend changes.

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