Abstract
The evidence from prior literature suggests that insider trading is related to firms' reported financial results and disclosure choices. I contribute to the literature by examining the association between narrative disclosure in earnings announcements and insider trading. Specifically, I hypothesize and find a positive association between changes in the optimistic tone of earnings announcements and CEOs' subsequent equity sales. In addition, I hypothesize and find that this relation is mitigated by the Sarbanes-Oxley Act and litigation risk. CEOs' financial gain from selling equity after more optimistic earnings announcements is small relative to their total compensation.
| Original language | English |
|---|---|
| Pages (from-to) | 276-282 |
| Number of pages | 7 |
| Journal | Advances in Accounting |
| Volume | 30 |
| Issue number | 2 |
| DOIs | |
| State | Published - 2014 |
Keywords
- Earnings announcements
- Insider trading
- Optimistic tone