Corporate usage of financial derivatives, information asymmetry, and insider trading

Nguyen, Hoa, Faff, Robert and Hodgson, Allan (2010) Corporate usage of financial derivatives, information asymmetry, and insider trading. Journal of Futures Markets, 30 1: 25-47. doi:10.1002/fut.20402

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Author Nguyen, Hoa
Faff, Robert
Hodgson, Allan
Title Corporate usage of financial derivatives, information asymmetry, and insider trading
Journal name Journal of Futures Markets   Check publisher's open access policy
ISSN 1096-9934
0270-7314
Publication date 2010-01
Year available 2009
Sub-type Article (original research)
DOI 10.1002/fut.20402
Open Access Status
Volume 30
Issue 1
Start page 25
End page 47
Total pages 23
Place of publication New York, NY, United States
Publisher Wiley Interscience
Collection year 2011
Language eng
Abstract This article investigates whether financial derivative usage by Australian corporations constitutes information asymmetry when proxied by profitable trading in the firms' securities by insiders. The findings show that insiders who trade in companies that employ derivatives make larger purchase returns compared to insiders in nonuser firms with regard to trading identity, trading intensity, variability of usage, volume of trading, and industry effects. A plausible explanation is that asymmetry is driven by derivative traders who undertake noisy transactions in firms where risk outcomes were previously transparent. Excess returns are confined to purchase transactions consistent with insiders primarily selling for noninformation reasons.
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status Non-UQ
Additional Notes Article first published online: 27 July, 2009.

Document type: Journal Article
Sub-type: Article (original research)
Collections: Non HERDC
ERA 2012 Admin Only
UQ Business School Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 3 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 3 times in Scopus Article | Citations
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Created: Wed, 02 Mar 2011, 11:02:31 EST by Karen Morgan on behalf of UQ Business School