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Directors’ trades, information hierarchy and ownership structure: evidence from India

Directors’ trades, information hierarchy and ownership structure: evidence from India In this paper we analyze the market reaction to directors’ trades in India and investigate whether the reaction is affected by the nature of trade (purchase or sale), by the type of director making the trade (chief executive officer, managing director, promoters, other executive directors, non‐executive directors, former directors etc.) or by the ownership structure of the company. We find that the absolute value of market reaction to directors’ purchases is significantly greater than to directors’ sales; type of director making the trade does not influence the market reaction; presence of dominant institutional investors tends to dilute the positive market reaction to directors’ purchases and that the presence of dominant monitoring corporate investors does not influence the market reaction to directors’ trades. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Advances in Management Research Emerald Publishing

Directors’ trades, information hierarchy and ownership structure: evidence from India

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Publisher
Emerald Publishing
Copyright
Copyright © 2007 Emerald Group Publishing Limited. All rights reserved.
ISSN
0972-7981
DOI
10.1108/97279810780001257
Publisher site
See Article on Publisher Site

Abstract

In this paper we analyze the market reaction to directors’ trades in India and investigate whether the reaction is affected by the nature of trade (purchase or sale), by the type of director making the trade (chief executive officer, managing director, promoters, other executive directors, non‐executive directors, former directors etc.) or by the ownership structure of the company. We find that the absolute value of market reaction to directors’ purchases is significantly greater than to directors’ sales; type of director making the trade does not influence the market reaction; presence of dominant institutional investors tends to dilute the positive market reaction to directors’ purchases and that the presence of dominant monitoring corporate investors does not influence the market reaction to directors’ trades.

Journal

Journal of Advances in Management ResearchEmerald Publishing

Published: Jun 1, 2007

Keywords: India; Business hierarchies; Ownership

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