Skip to main content

Research Repository

Advanced Search

Insider trading and financing constraints

Ataullah, Ali; Goergen, Marc; Le, Hang

Authors

Ali Ataullah

Marc Goergen

HANG LE HANG.LE@NOTTINGHAM.AC.UK
Associate Professor



Abstract

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.

Journal Article Type Article
Journal Financial Review
Print ISSN 0732-8516
Electronic ISSN 1540-6288
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 49
Issue 4
APA6 Citation Ataullah, A., Goergen, M., & Le, H. (in press). Insider trading and financing constraints. Financial Review, 49(4), https://doi.org/10.1111/fire.12053
DOI https://doi.org/10.1111/fire.12053
Publisher URL https://onlinelibrary.wiley.com/doi/abs/10.1111/fire.12053
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf

Files

Investment CF Sensitivity Ataullah Goergen Le 2014.pdf (226 Kb)
PDF

Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





You might also like



Downloadable Citations

;