We use cookies to ensure that we give you the best experience on our website. By continuing to browse this repository, you give consent for essential cookies to be used. You can read more about our Privacy and Cookie Policy.

Durham Research Online
You are in:

How do insider trading incentives shape nonfinancial disclosures? Evidence from product and business expansion disclosures

He, G. (2023) 'How do insider trading incentives shape nonfinancial disclosures? Evidence from product and business expansion disclosures.', Review of Quantitative Finance & Accounting, 6- (1). pp. 147-194.


Nonfinancial disclosures of product and business expansion planning occur frequently in practice and are an important vehicle by which managers convey corporate information to outsiders. However, little is known about how the opportunistic incentives of managers affect the choice of such nonfinancial disclosures. This study examines whether managers make their nonfinancial disclosures strategically for self-serving trading incentives. I find strong and robust evidence to suggest that managers manipulate the timing and selectivity of their nonfinancial disclosures in an attempt to maximize trading profits. Specifically, managers tend to disclose bad (good) news on products or business expansion before purchasing (selling) shares. I also find that such strategic behavior is more evident when the expected price impact of the disclosures is greater and when the CEOs are more powerful. However, I do not find evidence that the strategic behavior is weaker for firms with high institutional stock ownership. Overall, my results contribute to understanding managers’ strategic use of nonfinancial disclosures in fulfilling personal trading incentives, and should be of interest to boards of directors charged with the responsibility of monitoring and restricting opportunistic managerial disclosures and insider trades.

Item Type:Article
Keywords:managerial incentives; product and business expansion disclosures; insider trades
Full text:(VoR) Version of Record
Available under License - Creative Commons Attribution 4.0.
Download PDF
Full text:Publisher-imposed embargo
(AM) Accepted Manuscript
File format - PDF
Publisher Web site:
Publisher statement:This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit
Date accepted:25 July 2022
Date deposited:25 July 2022
Date of first online publication:20 August 2022
Date first made open access:22 August 2022

Save or Share this output

Look up in GoogleScholar