| Popis: |
This study examines the association between asymmetric timely loss recognition (TLR) and trading profits earned by corporate insiders. Consistent with TLR reducing insiders’ information advantages over outsiders, we find that insider trading profits are negatively associated with TLR. Moreover, this association mainly arises from insider sells, non-routine trades, and trades by non-CEO/CFO insiders. Further decomposition of insider trading profits reveals that TLR is negatively associated with only the price change component, not with volume component, of insider trades. Together, our evidence suggests that TLR reduces managers’ abilities to extract rents from investors via insider trading. |
