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National Post

This Week In Markets

10-6-2001

The inside scoop: A new study by Penn State University suggests that company insiders routinely trade stock on the basis of insider information. The trick is that they do so well ahead of time -- in some cases years before shares drop.

The study found that insider selling increases significantly, several months before a string of growth quarters is broken.

"Our study provides evidence that insiders possess, and trade upon, knowledge of specific and economically significant forthcoming accounting disclosures," said Bin Ke, one of the authors.

It seems securities regulators might need to look beyond the usual few days or weeks before a major stock move for evidence of insider trading.

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Steven Huddart
Smeal College of Business, Penn State University, University Park, PA 16802-3603 USA
(814) 865-0041
(814) 863-8393 fax
huddart@psu.edu
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