Answers are grounded in this paper and cite their sources.
Our evidence indicates that insiders’ trades provide significant new information to market participants and they are incorporated more fully in stock prices as compared to noninsiders’ trades. We find that market professionals do not front‐run insiders’ trades. Both insiders’ purchases and sales result in significant contemporaneous and subsequent price impact, while sales by large shareholders result in a contemporaneous stock price decline that is subsequently reversed. The arrival of insider purchases reverse the prevailing negative order imbalances from third party trades and lead to piggy‐backing by market professionals resulting in subsequent market purchase orders as well as stock price increases.
No takes yet. Share an insight, caveat, or question.
Inci et al. (2010) studied this question.
Synapse has enriched 10 related papers. Consider them for comparative context: