Double signals or single signal? An investigation of insider trading around share repurchases

Michael Arthur FIRTH, T. Y. LEUNG, Oliver M. RUI

Research output: Journal PublicationsJournal Article (refereed)

11 Citations (Scopus)


We examine directors’ dealing activity around share repurchasing periods in Hong Kong. There are significant insider trading activities before the share repurchasing period. Consistent with the signaling hypothesis, the directors’ purchase activities during the share repurchase period are significantly higher than the expected level while the directors’ sale activities are significantly lower than the expected level. Double signals of share repurchase and directors’ purchases create a stronger signal in conveying undervaluation, while insider sales around share repurchase reduces the undervaluation signal. We find some evidence that is consistent with the free cash flow and signaling arguments for share repurchases.
Original languageEnglish
Pages (from-to)378-388
Number of pages11
JournalJournal of International Financial Markets, Institutions and Money
Issue number4
Publication statusPublished - 1 Oct 2010



  • Signaling; Share repurchases; Insider trading

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