Document Type

Journal Article

Department/Unit

Department of Finance and Decision Sciences

Title

Insiders’ incentives for asymmetric disclosure and firm-specific information flows

Language

English

Abstract

Recent research suggests that insiders' incentives for capturing cash flows affect price formation process in which insiders are inclined to withhold good news and to accelerate the release of bad news (Jin and Myers, 2006). We investigate whether insiders' incentives for private control benefit, proxied by control-ownership wedge, affect firm-specific return characteristics. We find that control-ownership wedge is negatively related to the likelihood of positive return jumps and positively related to the extent of asymmetric market reaction to good news rather than to bad news. Overall, our results support the notion that corporate insiders increase opaqueness and withhold good news in order to capture unexpected cash flow. © 2013 Elsevier B.V.

Keywords

Control-ownership wedge, Jump risks, Stock price informativeness, Timing of disclosure

Publication Date

2013

Source Publication Title

Journal of Banking and Finance

Volume

37

Issue

9

Start Page

3562

End Page

3576

Publisher

Elsevier

DOI

10.1016/j.jbankfin.2013.05.001

ISSN (print)

03784266

ISSN (electronic)

18726372

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