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Two essays on insider trading: Empirical examinations of long-run insider returns and insiders' options exercise behavior
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
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.
https://digitalcommons.unl.edu/dissertations/AAI3558627