Partha Gangopadhyay and Ken Yook
The authors examine if opportunistic insider trading profits decrease after the enactment of the Dodd-Frank Act (DFA) in 2010. The DFA expands legal prohibitions on insider…
Abstract
Purpose
The authors examine if opportunistic insider trading profits decrease after the enactment of the Dodd-Frank Act (DFA) in 2010. The DFA expands legal prohibitions on insider trading in the USA.
Design/methodology/approach
The authors identify opportunistic insider trades following a method that is outlined in Cohen et al. (2012). The authors examine univariate statistics and perform multivariate regression tests to examine opportunistic trading profits before and after the DFA. Similar multivariate regression tests have been used widely in the literature to examine the profitability of insider trades.
Findings
The authors find that opportunistic insider purchases were highly profitable before the DFA. Profits after opportunistic purchases were significantly lower after the DFA. Opportunistic insider sales were contrarian trades both before and after the DFA. However, share prices kept increasing after insiders sold their shares.
Originality/value
To the best of the authors’ knowledge, the paper is the first study that compares the profitability of opportunistic insider trades, as identified by Cohen et al., before and after the DFA. The study contributes to the literature that finds that insiders change their strategic trading behavior when the potential costs of the illegal trading increase due to regulatory action.
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Ken Yook, William C. Hudson, Steven Cole and Partha Gangopadhyay
An examination of insider trading before and after the announcement of Credit Watch placements sheds new light on the study of both bond rating changes and insider trading. This…
Abstract
An examination of insider trading before and after the announcement of Credit Watch placements sheds new light on the study of both bond rating changes and insider trading. This paper utilizes Credit Watch placements classified by 11 indentifiable trigger events for the years 1981‐1990. We find significant insider purchases before positive implication placements, but no sales before negative implication placements. Among individual trigger events, we observe significant insider purchases before and after placements due to improved operating performance, bidding on a firm with a higher debt rating and firms increasing their debt‐to‐equity ratios. Significant insider purchases are found before placements due to purchasing assets. Significant insider sales are found before and after placements due to poor operating performance.
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Ken C. Yook and Partha Gangopadhyay
The wealth effect of accelerated stock repurchase (ASR) documented by previous studies is not as large as the authors would have expected. The authors believe that there are…
Abstract
Purpose
The wealth effect of accelerated stock repurchase (ASR) documented by previous studies is not as large as the authors would have expected. The authors believe that there are potentially important sampling problems in the previous studies, which make the results less reliable. Identifying a number of factors that can possibly affect the announcement-period returns, the purpose of this paper is to reexamine the wealth effect of ASRs.
Design/methodology/approach
The paper identifies a number of factors that can possibly affect the announcement-period returns to ASRs which include: whether an ASR announcement in the press is the initiation date or the completion date of the ASR; the size of the ASR program; whether an ASR is part of an open market repurchase (OMR) program; the frequency of ASR announcements by a firm; whether other corporate news is announced simultaneously with an ASR. The paper partitions the ASR sample into three groups, and then examines the wealth effect of these groups.
Findings
The empirical results show that the market reacts differently to the announcement of ASR in these three groups. The three-day announcement-period CAR (t=−1, +1) is 3.59 percent for the high-wealth-effect group, 2.01 percent for the medium-wealth-effect group, and 1.48 percent for the low-wealth-effect group. The paper also identifies the size of the ASR program, whether the ASR is announced simultaneously with an OMR or not, and the frequency of ASR announcements are the most important determinants of the announcement-period abnormal returns.
Originality/value
These findings suggest that the weaker wealth effects of ASRs that have been documented in previous studies are due to sampling related issues.
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Thanh T. Nguyen, Ninon K. Sutton and Dung (June) Pham
The purpose of this paper is to reexamine the stock price drifts after open-market stock repurchase announcements by differentiating actual repurchases from repurchase…
Abstract
Purpose
The purpose of this paper is to reexamine the stock price drifts after open-market stock repurchase announcements by differentiating actual repurchases from repurchase announcements and by controlling for the repurchasing firms’ earnings improvement in the announcement year relative to the prior year.
Design/methodology/approach
The authors use the calendar-time method and matching method based on different criteria to calculate the post-announcement abnormal returns.
Findings
The results show that only firms actually repurchasing their shares exhibit a positive post-announcement drift. More importantly, the authors find that these repurchasing firms have the same post-announcement drift as their matching firms that have similar size and earnings performance but do not repurchase. This supports the argument that the post-repurchase announcement drift found in previous studies is not a distinct anomaly but the post-earnings announcement drift in disguise.
Social implications
The post-repurchase announcement drift found in previous studies is the post-earnings announcement drift in disguise.
Originality/value
The study shows that because high earnings performance positively relates to real repurchase activities, controlling for earnings performance in examining whether a drift occurs after repurchase announcements.
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In this article, I analyze constructions of and responses to vulnerability in the US government and a now-prominent evangelical aid organization, World Vision, during the 1950s…
Abstract
In this article, I analyze constructions of and responses to vulnerability in the US government and a now-prominent evangelical aid organization, World Vision, during the 1950s and 1960s in Korea and Vietnam. World Vision was founded as the “development discourse,” Cold War rhetoric, and the neo-evangelical movement were all rising to prominence in the United States. World Vision’s early understandings of vulnerability resonated with Cold War and modernization theory rhetoric in certain ways; however, its approaches to remake vulnerable Asians were often distinct. World Vision evangelical Christians looked to private voluntary organizations and individual conversions in a free society to remake individuals and nations, notions not so different from neoliberal development approaches today. US foreign aid approaches were rooted in nation-building for centralized, planned government institutions and economies to modernize “traditional” people. This article examines the complex relationships between missionaries, evangelists, US foreign aid experts and the military in American constructions of vulnerable traditional Asians and interventions to modernize and Christianize them. In examining roots of faith-based development models through the case of World Vision and notions of vulnerability, historical threads and lineages emerge for understanding the relationship of religion and the state in modernizing projects, and faith-based and neoliberal development models.
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This paper empirically investigates the effect of economic policy uncertainty (EPU) on the UK money demand stability during the inter-war period (1920–1938). Both a narrow…
Abstract
Purpose
This paper empirically investigates the effect of economic policy uncertainty (EPU) on the UK money demand stability during the inter-war period (1920–1938). Both a narrow definition (M0) and a broad definition (M3) of money are investigated.
Design/methodology/approach
The empirical investigation is conducted by employing the autoregressive distributed lag (ARDL) bounds testing approach to cointegration.
Findings
Results presented indicate a stable demand for both definitions of money only when EPU is included as one of the determinants of demand function. The EPU imposes a negative effect on the demand for both definitions of money. The causality test results further indicate long- and short-term causality from the determinants (including EPU) to both forms of money demand.
Practical implications
Significant presence of the economic uncertainty weakens the effects of the monetary policy on the economy.
Originality/value
This is a historical economics paper. Given the turmoil and uncertainty associated with the inter-war period, an empirical investigation of UK money demand is an interesting exercise. This is the first such paper.
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Jessica Paule-Vianez, Júlio Lobão, Raúl Gómez-Martínez and Camilo Prado-Román
This paper aims to evaluate the influence of economic policy uncertainty (EPU) on the momentum effect, analysing its influence depending on the economic cycle and in different…
Abstract
Purpose
This paper aims to evaluate the influence of economic policy uncertainty (EPU) on the momentum effect, analysing its influence depending on the economic cycle and in different quantiles.
Design/methodology/approach
To determine the influence of EPU in the momentum effect taking into account the economic cycle and the level of the quantile, linear regression and quantile regression have been applied for the period from 2 January 1985 to 30 April 2019 for the US stock market.
Findings
It is shown that an increased feeling of insecurity associated with EPU reduces the momentum effect, especially in times of recession. Distinguishing by quantiles, an asymmetry in the impact of EPU in the momentum effect is discovered, finding that EPU reduces (increases) the profits of momentum strategies in the lowest (highest) quantiles. In the highest quantiles, an investor can obtain higher extraordinary returns with this strategy. For example, in the highest quantile, a one-point increase in the EPU levels would have increased the daily profitability by 12.7 basis points. These findings have important implications for investors and policymakers.
Originality/value
To the best of the authors’ knowledge, this is the first paper that evaluates the influence of EPU on the momentum effect by conducting an analysis based on the economic cycle and different quantiles, demonstrating how these factors are relevant in the influence of this uncertainty in the momentum anomaly.
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Josefien J.F. Breedvelt, Lucy V. Dean, Gail Y. Jones, Caroline Cole and Hattie C.A. Moyes
The purpose of this paper is to assess whether mental health symptoms affect one-year reoffending rates upon release from prison for participants engaging in substance dependence…
Abstract
Purpose
The purpose of this paper is to assess whether mental health symptoms affect one-year reoffending rates upon release from prison for participants engaging in substance dependence treatment in the UK.
Design/methodology/approach
A retrospective cohort study was used to assess reconviction outcomes upon release. The Comprehensive Addiction and Psychological Evaluation (CAAPE) was administered to 667 inmates admitted to the programme. The effect of mental health, drug use, and static risk factors on reoffending was assessed at one-year post release.
Findings
Logistic regression analysis showed that symptoms of Major Depressive Disorder at the start of substance dependence treatment increased the likelihood to reoffend, whilst Obsessive Compulsive Disorder symptoms and length of sentence decreased the likelihood to reoffend. Antisocial Personality Disorder symptoms show a trend towards increasing the likelihood to reoffend. In addition, previously established risk factors for reoffending, including dependence on heroin, crack/cocaine, and poly drug use significantly increased the likelihood of reconviction.
Practical implications
Depressive symptomatology pre-treatment could affect reoffending outcomes for participants in substance dependence treatment in prison. An integrative approach addressing both substance misuse and mental health factors is pivotal. Future efforts to address both simultaneously can be made to improve assessment, training, treatment, and through care for prisoners in substance dependence treatment.
Originality/value
Few studies have assessed the effect of mental health factors on reoffending outcomes for offenders in substance dependence treatment. A large sample was studied in an understudied population of UK prisoners in substance dependence treatment. The results have implications for clinical settings where mental health symptoms are not addressed concurrently with substance dependence. This finding can inform policy makers and practitioners who provide substance dependence treatment in prison.