Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Earnings management and insider trading: A study of firms listed on Nasdaq OMX Stockholm
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2015 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

There is an ethical dilemma and a legal issue of earnings management and insider trading, and a risk of it affecting the accuracy of financial markets. The use of earnings management leads to an information asymmetry between the corporate management and the financial markets. This paper investigates how earnings management affects insider trading and whether insider trading is a good information source about earnings quality and future performance. Studying companies believed to have conducted earnings management on Nasdaq OMX Nordic Stock Exchange (Stockholm) from 2005 through 2014 indicates that: (1) insiders do not sell shares after managing earnings upwards; (2) the relationship between insider selling and future earnings performance is positive, contradicting agency theory and previous research; (3) the market’s reaction to the earnings announcement one year after suspected earnings management is positive for firms where insiders have sold shares, and vice versa. Taken together, our results are not in line with those of previous studies conducted on other markets. This is likely to depend on the unique Swedish setting with the existence of endowment insurances, where insiders can trade shares without having to disclose their transactions to the market. Because of this, we argue that insider trading is not an adequate signal about Swedish firms’ earnings quality and future performance. We therefor further emphasize the importance of a change in the Swedish legislation, in order to insure the accuracy of financial markets and to protect other investors. 

Place, publisher, year, edition, pages
2015. , 44 p.
Keyword [en]
Earnings management; Insider trading; Earnings around thresholds; Information asymmetry; Agency theory; Endowment insurance
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-256488OAI: oai:DiVA.org:uu-256488DiVA: diva2:825622
Educational program
Master Programme in Business and Management
Supervisors
Available from: 2015-06-24 Created: 2015-06-24 Last updated: 2015-06-24Bibliographically approved

Open Access in DiVA

Earnings management and insider trading – Nielsen & Westberg(5259 kB)714 downloads
File information
File name FULLTEXT01.pdfFile size 5259 kBChecksum SHA-512
b4e667425a5fd167ba20d42d0c911947482c8bf837910e4ee8fea6e7e8082c59338bcfabeefdccdbaa27a24c067e5efedd89d194ff1cf31385081125cba45911
Type fulltextMimetype application/pdf

By organisation
Department of Business Studies
Business Administration

Search outside of DiVA

GoogleGoogle Scholar
Total: 714 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

urn-nbn

Altmetric score

urn-nbn
Total: 559 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf