Insiders' Informative Trading: Evidence From Multi-Company Directors

This paper examines the "Relative" information contained in insider director transactions. The authors find that insider transactions of multi-company directors reflect superior information about future relative returns; that is, directors are more likely to buy (sell) stocks of firms they direct that have better (worse) future returns. Examining related issues, they find weak support that December tax loss selling reduces the informativeness of directors' sales, that directors' private information includes but exceeds their superior knowledge of a company's future earnings realizations, and that the busyness of directors affects their informativeness, especially in regards to selling.