Directors' announcements : Australian evidence

Wong, Diana. (1997). Directors' announcements : Australian evidence Master's Thesis, School of Business, The University of Queensland.

       
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Author Wong, Diana.
Thesis Title Directors' announcements : Australian evidence
School, Centre or Institute School of Business
Institution The University of Queensland
Publication date 1997
Thesis type Master's Thesis
Total pages 58
Language eng
Subjects 1402 Applied Economics
Formatted abstract Directors are assumed to have the best knowledge about their companies' current and future positions. As a result, when directors buy or sell a company's shares, it may imply a signal about the company's future growth. The purpose of this study is to investigate share price changes in relation to directors' trades in Australia: (1) Do directors buy (sell) shares before share price increases (decreases)? (2) Can market participants use information in announcements of directors' trades to earn abnormal profits? A sample consisting of 354 announcements related to directors' shareholdings is used in this study. The cumulative abnormal returns are hypothesised to be positive following a substantial increase in directors' shareholdings; and, the cumulative abnormal returns are hypothesised to be negative following a substantial decrease in directors' shareholdings. The results reveal that directors do not appear to be using inside information to earn large abnormal profits or to avoid large abnormal losses following their purchases or sales of shares in their own companies. The results provide only weak evidence of small positive abnormal returns following purchase transactions and no evidence of negative abnormal returns following sales transactions. The results also suggest that it is unlikely market participants would be able to use directors' announcements data to earn abnormal returns.

 
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