City Research Online

Abstract

We find that insiders adopt dissimulation strategies to conceal their informational advantage and trade profitably when their firms’ stock prices reach 52-week highs and lows, exploiting the anchoring biases of uninformed investors. Insiders’ trading profitability depends on their firms’ future stock returns, operating efficiency, and investment sentiment, but not on earnings surprises. We document that male board members and insiders with long investment horizons are more likely to use dissimulation strategies. Overall, we provide evidence that insiders benefit from these price extremes, despite their status as publicly available, irrelevant, historical price levels that normally should not predict future stock returns.

Publication Type:	Article
Additional Information:	This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited. ©2023 The Authors. The Financial Review published byWiley Periodicals LLC on behalf of Eastern Finance Association.
Publisher Keywords:	insider trading, 52-week price high/low, anchoring bias, recency bias, trading strategies, stock market anomalies
Subjects:	H Social Sciences > HG Finance
Departments:	Bayes Business School > Finance
SWORD Depositor:	Symplectic Administrator

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