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Two essays on insider trading: Empirical examinations of long-run insider returns and insiders' options exercise behavior

Thuy H Simpson, University of Nebraska - Lincoln

Abstract

Numerous studies to date have addressed short-term returns earned by insiders with mixed results. Longer-term performance of executives and directors, however, has not been addressed in the literature. In essay one, I investigate whether insiders actually earn abnormal returns in the long-run by deriving a more accurate and comprehensive measure of insiders' realized returns. Key results from insiders' dollar-weighted returns, which explicitly account for capital flow timing and magnitude from all SEC-reported insider transactions, show that insiders fail to earn abnormal returns in their overall portfolio during their tenure with the firm. In essay two, I examine option exercise behaviors that have not been addressed in prior literature. This includes an analysis of exercised options and available-but-unexercised options, a comparison between multiple and single exercises, as well as a comparison between fractional and full exercises. I also investigate factors associated with the decision to exercise, the decision to exercise multiple options, and the decision to exercise the entire option grants at each exercise date. ^

Subject Area

Economics, Finance

Recommended Citation

Simpson, Thuy H, "Two essays on insider trading: Empirical examinations of long-run insider returns and insiders' options exercise behavior" (2013). ETD collection for University of Nebraska - Lincoln. AAI3558627.
http://digitalcommons.unl.edu/dissertations/AAI3558627

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