Abstract

This thesis explores whether corporate insiders exhibit trading patterns that would suggest that they exploit any potential information advantages they may have over other market participants. Furthermore, we consider information asymmetries between different types of insiders by comparing abnormal net sales between managers and non-managing insiders, between top-level managers and low-level managers, and between financial managers and non-financial managers. We show that managers have higher abnormal net sales than non-managing insiders, and that top-level managers have higher abnormal net sales than low-level managers prior to lawsuit announcements. We find a significant negative correlation between abnormal stock returns and abnormal net sales by managers and by top-level managers. Our evidence suggests that managers may engage in net selling in anticipation of the negative stock returns that are typically associated with securities class action announcements. In particular, high-rank insiders appear to place more profitable trades than low-rank insiders prior to lawsuit announcements.