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<p>I investigate whether managers learn about who is buying and selling their firm’s stock before public disclosure. I examine insider trading prior to the disclosure of Schedule 13Ds and 13Gs, which are required when activist or passive investors acquire more than 5% ownership, respectively. These disclosures trigger a significant price jump of 6.1% for 13Ds and 1.7% for 13Gs. I document elevated insider net purchases before the disclosures, peaking on the day blockholders cross the 5% threshold. Price and volume signals cannot fully explain the pattern. Cross-sectional analyses reveal that pre-disclosure insider net purchases are higher when investors report pre-filing communication with the management, when investors and target firms are geographically proximate, or when companies have invested in investor relations. Collectively, my results reveal that managers learn about their firms’ ownership changes by interpreting market signals and communicating with investors, and they subsequently trade on this information before public disclosure.</p>

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Do managers learn about their firm’s ownership changes before public disclosure?

  • 期刊论文

  • 发表日期：

    2026年5月8日

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  • Jean Jieyin Zeng

摘要

I investigate whether managers learn about who is buying and selling their firm’s stock before public disclosure. I examine insider trading prior to the disclosure of Schedule 13Ds and 13Gs, which are required when activist or passive investors acquire more than 5% ownership, respectively. These disclosures trigger a significant price jump of 6.1% for 13Ds and 1.7% for 13Gs. I document elevated insider net purchases before the disclosures, peaking on the day blockholders cross the 5% threshold. Price and volume signals cannot fully explain the pattern. Cross-sectional analyses reveal that pre-disclosure insider net purchases are higher when investors report pre-filing communication with the management, when investors and target firms are geographically proximate, or when companies have invested in investor relations. Collectively, my results reveal that managers learn about their firms’ ownership changes by interpreting market signals and communicating with investors, and they subsequently trade on this information before public disclosure.