In this paper, insider trading is viewed as a signal of managements' assessments of firms' future prospects and its information content is compared to that in managements' earnings forecasts. These forecasts are explicit statements of managements' assessments of future prospects. A number of measures of insider trading designed to capture the information aspect of trading are investigated. The results indicate that the insider trading measures do not capture the information conveyed in earnings forecasts, although there is evidence that insider trading measures that take into account the timing of trades relative to the date of the release of the forecast are informative.
Penman, Stephen. "A Comparison of the Information Content of Insider Trading and Management Earnings Forecasts." Journal of Financial and Quantitative Analysis 20, no. 1 (March 1985): 1-17.
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