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Corporate Bankruptcy and Insider Trading*
Formats Available in JSTOR: PDF
Abstract(back to top)
We document significant sales by the insiders of firms filing bankruptcy petitions prior to the filing date. We also find that selling is more intense for top executives and officers and that insiders in general systematically sell stock before prices fall and buy stock after prices have fallen. Although this trading pattern may simply reflect an implicit compensation arrangement between insiders and stockholders, the significant sell‐off does raise potential questions regarding managements' incentives to maximize shareholder wealth throughout the Chapter 11 process.
Bibliographic Information(back to top)
- Corporate Bankruptcy and Insider Trading
- H. Nejat Seyhun and Michael Bradley
- The Journal of Business
- Vol. 70, No. 2 (April 1997) (pp. 189-216)
Notes and References(back to top)
This item contains 1 note(s).
Notes
* We have received helpful comments from Tim Burch, Douglas Diamond, Mike Hertzel, Mark Lipson, and Marie Sushka and an anonymous referee and seminar participants at the University of Michigan and Arizona State University. We thank Rene Derieux and Paul Mathulla for excellent research assistance.
Items Citing this Item (back to top)
2 item(s) in JSTOR cite this item
- Louis H. Ederington and Jeremy C. GohVol. 74, No. 3 (July 2001) pp. 459-476Stable URL: http://www.jstor.org/stable/10.1086/321934
- Walayet A. Khan, Asjeet S. LambaVol. 40, No. 1 (Winter, 2001) pp. 3-15Stable URL: http://www.jstor.org/stable/40473312