Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/23099
Title: Insider trading returns and dividend signals
Authors: Cheng, LTW 
Davidson, WN
Leung, TY
Keywords: Dividends
Earnings
Information asymmetry
Insider trading
Issue Date: 2011
Publisher: Elsevier Science Bv
Source: International review of economics and finance, 2011, v. 20, no. 3, p. 421-429 How to cite?
Journal: International Review of Economics and Finance 
Abstract: The literature shows that insider trading activities and dividends contain information content and serve as signals to firm value. If insider return is a proxy for information asymmetry, we should expect a positive relation between dividends and insider returns. Using a sample of unambiguous (good and bad) news concerning earnings and dividend announcements from Hong Kong firms, we show that information asymmetry is stronger for bad news firms with insider sales than good news firms with insider purchases. In addition, we improve the methodology of Khang and King [Khang, K., & King, T. H. D. (2006). Does dividend policy relate to cross-sectional variation in information asymmetry? Evidence from returns to insider trades. Financial Management, 35, 71-94] and provide evidence that dividend is a credible signal for measuring information asymmetry.
URI: http://hdl.handle.net/10397/23099
ISSN: 1059-0560
DOI: 10.1016/j.iref.2010.11.016
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