Do Director´s trade at bargain prices? Event-Study based evidence fro...

Federal law requires managers (directors) of issuing companies (bonds, stocks) to report proprietary trading activities within 3 days after the trade. As a part of insider regulations, disclosure of directors’ dealings aims at preventing unlawful use of insider information not available to other market participants. We present event-study based evidence from 925 directors’ dealings in the period of 2008 to 2016 from the Austrian stock market (stock purchases and sales) and show that directors’ dealings – once they have been revealed to the public – impact market prices and trading activity. We further document different market reactions depending on the type of the director (e.g. CEO vs. supervisory board members) and the dollar-valued size of the transaction. Finally, directors seem to have particular abilities in market timing, i.e. they buy at relative low prices and vice versa liquidate their holdings after notable price inclines.