UK Directors' Trading: The Impact of Dealings in Smaller Firms

for research assistance, and Ray Burnley of the University of Exeter Social Studies Data 2Processing Unit for programming advice. We are also grateful to two anonomous referees for substantive comments on an earlier draft. 3Abstract This paper reassesses the UK results of significant abnormal returns from directors ' trading for a new sample of directors ' trades 1984-1986, and finds that abnormal returns tend to be concentrated in smaller firms. When an appropriate benchmark portfolio is used, it is found that the significance of the abnormal returns is substantially reduced, with the implication that directors ' trading does not yield particularly high profits to either the directors themselves or to an outside investor mimicking those trades.