Idiosyncratic Risk and Corporate Transactions

@inproceedings{BenDavid2010IdiosyncraticRA,
  title={Idiosyncratic Risk and Corporate Transactions},
  author={Itzhak Ben-David and Darren T. Roulstone},
  year={2010}
}
It has been documented that insiders trade when they perceive their firms are mispriced and when they hold private information about future cash flows. Based on these findings, we test whether insiders at firms with high-idiosyncratic risk (which is associated both with financial anomalies and with greater private information in prices) earn higher returns to their trades than insiders at firms with lower idiosyncratic risk. We document that, indeed, the profitability of corporate transactions… CONTINUE READING

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