내부자 거래와 이익지속성, 그리고 시장 반응

This study examines the effect of insider trading on earnings persistence and investors' responses to it. The insider uses the information advantage to manage earnings before stock trading to obtain abnormal stock price gains through selling and buying stocks. On the other hand, it is known that insider trading reduces information asymmetry by transferring inside information to the outside. This study examines the effects of insider trading on earnings persistence and persistence of earnings components and how investors perceive it in capital markets. The results show that insider trading has no significant effect on the persistence of earnings and its components. However, CEOs' buying and selling transactions all reduced earnings persistence and the persistence of accruals and cash flows. CEOs are more informed than other executives, especially because they are deeply involved in profit-making and accounting decisions, which ultimately translates into a decrease in profitability. As a result of examining the response of the capital market, investors rationally evaluate the persistence of earnings and the persistence of earnings components in insider trading. However, investors overestimate both the persistence of earnings and the persistence of accruals and cash flows for CEO purchases. Investors do not overestimate the chief executive's sale, but rather reasonably evaluate it. This study is expected to make additional contributions to the results of previous studies that presented contradictory results on insider trading. In particular, even though top management's trading actually reduces earnings persistence, investors in the capital market overestimate the perception of future management performance as a positive signal that they will be placed on top management's buying behavior. These findings are expected to provide useful implications for investors and financial authorities.