Directors’ share dealings and corporate insolvencies: Evidence from the UK

Ozkan, A, Poletti-Hughes, J and Trzeciakiewicz, A (2017) Directors’ share dealings and corporate insolvencies: Evidence from the UK. The European Journal of Finance, 23 (5). pp. 427-455.

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Official URL: https://www.tandfonline.com/doi/full/10.1080/13518...

Abstract

This paper investigates the relation between insider trading and the likelihood of insolvency with a specific focus on the directors’ sale and purchase transactions preceding insolvency. We use a unique dataset on directors’ dealings in 474 non-financial UK firms, of which 117 filed for insolvency, over the period 2000-2010. We show that the directors of insolvent firms increase their purchase transactions significantly as the insolvency approaches. The results also reveal a significantly positive relation between net purchases and the likelihood of insolvency, which is observed only during the last six-month trading period. The relation is negative for the earlier trading periods. While the earlier purchase transactions appear to be motivated by superior information held by insiders, the purchase trades closer to the insolvency date are possibly initiated by directors’ motives to influence the market’s perception of the firm in an attempt to avert or delay insolvency.

Item Type:	Article
Additional Information:	Source info: Ozkan, A., Poletti-Hughes, J. & Trzeciakiewicz, A. (2017), ‘Directors’ share dealings and corporate insolvencies: evidence from the UK’, The European Journal of Finance 23(5), 427–455.
Uncontrolled Keywords:	directors' trades, likelihood of insolvency
Depositing User:	Symplectic Admin
Date Deposited:	28 Apr 2016 14:25
Last Modified:	04 Mar 2024 06:32
DOI:	10.1080/1351847X.2015.1040168
Related URLs:	Author Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3000985