Insider trading and financing constraints
Insider trading may alleviate financing constraints by conveying value‐relevant information to the market (the information effect) or may exacerbate financing constraints by impairing market liquidity and distorting insiders’ incentives to disclose value‐relevant information (the confidence effect)....
| Main Authors: | , , |
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| Format: | Article |
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Wiley
2014
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| Online Access: | https://eprints.nottingham.ac.uk/50671/ |
| _version_ | 1848798310807109632 |
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| author | Ataullah, Ali Goergen, Marc Le, Hang |
| author_facet | Ataullah, Ali Goergen, Marc Le, Hang |
| author_sort | Ataullah, Ali |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | Insider trading may alleviate financing constraints by conveying value‐relevant information to the market (the information effect) or may exacerbate financing constraints by impairing market liquidity and distorting insiders’ incentives to disclose value‐relevant information (the confidence effect). We examine the significance of these two contrasting effects by investigating the link between insider trading and financing constraints as measured by the investment‐cash flow sensitivity. We find that, overall insider trading exacerbates financing constraints; however the information effect dominates the confidence effect for insider purchases. Only trades by executive directors are significantly related to financing constraints. |
| first_indexed | 2025-11-14T20:17:45Z |
| format | Article |
| id | nottingham-50671 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T20:17:45Z |
| publishDate | 2014 |
| publisher | Wiley |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-506712020-05-04T16:55:42Z https://eprints.nottingham.ac.uk/50671/ Insider trading and financing constraints Ataullah, Ali Goergen, Marc Le, Hang Insider trading may alleviate financing constraints by conveying value‐relevant information to the market (the information effect) or may exacerbate financing constraints by impairing market liquidity and distorting insiders’ incentives to disclose value‐relevant information (the confidence effect). We examine the significance of these two contrasting effects by investigating the link between insider trading and financing constraints as measured by the investment‐cash flow sensitivity. We find that, overall insider trading exacerbates financing constraints; however the information effect dominates the confidence effect for insider purchases. Only trades by executive directors are significantly related to financing constraints. Wiley 2014-10-16 Article PeerReviewed Ataullah, Ali, Goergen, Marc and Le, Hang (2014) Insider trading and financing constraints. Financial Review, 49 (4). pp. 685-712. ISSN 1540-6288 https://onlinelibrary.wiley.com/doi/abs/10.1111/fire.12053 doi:10.1111/fire.12053 doi:10.1111/fire.12053 |
| spellingShingle | Ataullah, Ali Goergen, Marc Le, Hang Insider trading and financing constraints |
| title | Insider trading and financing constraints |
| title_full | Insider trading and financing constraints |
| title_fullStr | Insider trading and financing constraints |
| title_full_unstemmed | Insider trading and financing constraints |
| title_short | Insider trading and financing constraints |
| title_sort | insider trading and financing constraints |
| url | https://eprints.nottingham.ac.uk/50671/ https://eprints.nottingham.ac.uk/50671/ https://eprints.nottingham.ac.uk/50671/ |