The Open Business Journal

2008, 1 : 40-52
Published online 2008 September 05. DOI: 10.2174/1874915100801010040
Publisher ID: TOBJ-1-40

Legal Corporate Insider Trading and the Price Impact of Private Information: Evidence for Germany

Wolfgang Aussenegg and Robert Ranzi
Department of Finance and Corporate Control, Vienna University of Technology, Favoritenstrasse 9-11, A-1040 Vienna, Austria.

ABSTRACT

This study examines the information value of corporate insider trading disclosures for a sample of 490 German companies. Our results indicate that insiders selling stocks in their own company reveal negative information about the intrinsic firm value. This is especially the case for large volume sale transactions. In addition, stock prices of smaller companies react stronger to insider transactions. Furthermore, insiders tend to time their transactions, selling shares after stock price increases and buying shares after stock price decreases.

Keywords:

Corporate insider trading, event study, abnormal performance, German stock market.