Investment Intelligence from
Insider Trading
Considering the arcane nature of his subject, Seyhun manages genuine readability.
Publishers Weekly
Insider information is
becoming more widely availableNow, it may be easier to fathom, too. Robert Barker,
Business Week
The term insider trading
refers to the legal stock transactions of the officers, directors, and large shareholders
of a firm. Many investors believe that corporate insiders, informed about their firms'
prospects, buy and sell their own firm's stock at favorable times, reaping significant
profits. The key question for stock market investors is whether publicly available
insider-trading information can help them to outperform a simple passive index fund.
Basing his insights on an
exhaustive data set that captures information on all reported insider trading in all
publicly held firms over a period of twenty-one years--over one million transactions!--H.
Nejat Seyhun shows how investors can use insider information to their advantage. He
documents the magnitude and duration of the stock price movements following insider
trading, determinants of insiders' profits, and the risks associated with imitating
insider trading. He looks at the likely performance of individual firms and of the overall
stock market, and compares the value of what one can learn from insider trading with
commonly used measures of value such as price-earnings ratio, book-to-market ratio, and
dividend yield
445 pages.