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The short-term impact of director trading in UK closed-end funds

Author

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  • Dimitris Andriosopoulos
  • Michael Steliaros
  • Dylan C. Thomas

Abstract

Most closed-end funds are transparent entities that hold securities that are actively traded in liquid markets. In such a setting, the argument that director transactions mitigate information asymmetry has very limited applicability. Our results provide support for the theory of Barber and Odean [2008. "All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors." Review of Financial Studies 21: 785-818]: retail investor decision-making is influenced by attention-grabbing events. Director purchases are one such attention-grabbing event and are associated with significant positive price returns - the magnitudes of which are linked to the size of the purchase, the size of the fund, and the investment mandate. Trading volumes increase at the time of the purchase but most of the initial price responses and trading volumes dissipate over the following 15 days.

Suggested Citation

  • Dimitris Andriosopoulos & Michael Steliaros & Dylan C. Thomas, 2015. "The short-term impact of director trading in UK closed-end funds," The European Journal of Finance, Taylor & Francis Journals, vol. 21(8), pages 672-690, June.
    • Handle: RePEc:taf:eurjfi:v:21:y:2015:i:8:p:672-690
    DOI: 10.1080/1351847X.2013.867522
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    Cited by:

    1. Dagmar Linnertová & Oleg Deev, 2015. "Insider Trading Activities and Returns of German Blue Chips," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 63(6), pages 1995-2003.

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