College of Business: University of Illinois at Urbana-Champaign

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What Insider Trading can Tell You


8/8/2005

Is your stock a buy?  That's a key question to ask a corporate CEO. And a good way to reap some financial rewards when the CEO is buying his or her own stock. 

Department of Finance Professor Josef Lakonishok, quoted in MoneySense.ca, says that when insiders buy, there is generally an increase in stock prices.

According to the website, in a 2001 study, Lakonishok found that insiders beat the overall market by three to four percentage points when they bought shares in their own companies and held them for a year.

UIUC College of Business