The Securities and Exchange Commission’s Rule 10b5-1, a regulation devised to clarify existing insider trading prohibitions, gives executives a way to legally plan trades of their company’s stock when they do not possess any relevant, non-public information. But research conducted by Penn State Smeal College of Business accounting researchers shows that insiders had significant influence on the parameters of Rule 10b5-1 in favor of less stringent regulations.
Managers constantly feel pressure from stakeholders to meet or exceed past stock performance. If earnings fall short, they may take matters into their own hands and adjust R&D and marketing budgets to improve short-term stock returns. Recent research from the Penn State Smeal College of Business examines why managers behave this way.
Announcing a merger on a Friday may not be the best idea if you want people to pay attention. Recent research by two Penn State accounting professors suggests that investor inattention results in lower trading reactions to Friday merger announcements. They advise investors to be aware of the timing of merger announcements and pay more attention to transactions announced on Friday.
Steve Huddart explores volume and price patterns surrounding a stock’s 52-week highs and lows, explaining how a stock’s trading range, the size of the firm, and the degree to which investors are attentive and active in the market play a role in stock pricing and volume.
By studying after-hours trading data, Jared Williams analyzes the effects of Jim Cramer’s stock recommendations on the market. Williams considers the timing of the market’s response, the role of investor attention, and how Cramer’s advice impacts both investors and viewers.