The information content of insider trading - The evidence in China securities market

Two illegal trading, one by a corporate insider, the other by a tippee (an outsider insider), are analyzed in two acquisitions for YANZHONG company in 1998 and 1993. Consistent with previous studies, insider trading is found to make great abnormal return following insider-buying day. Moreover, the average abnormal return during the period from buying day to public announcement day is also great, with the significant level less than 7%. However, we find return following insider selling give incorrect signal to market. Based on above, we try to find any herd behaviors or casual relations between tender offers firms, but failed to approve them, all shows there are large information leakage before acquisitions.