The Impact of CEO Insider Trading on Stock Performance: An event study of stock performance following CEO insider trading announcements on the Nasdaq First North Growth Market

Sammanfattning

This study investigates the impact of CEO insider trading on short-term stock performance within the Nasdaq First North Growth Market. Utilising a dataset of 704 CEO insider transactions spanning the time period 2019 to 2023, this event study examines abnormal returns associated with insider trades by examining the factors transaction type, size, and the size of market capitalisation. Our findings reveal that insider transactions generate abnormal returns. In the shorter event windows acquisitions generate greater significant abnormal returns compared to disposals. Larger transactions produce higher abnormal returns, suggesting a stronger signalling effect to the market. This is especially prominent when relating the size of a transaction to the market value of equity of the firm. The size of market capitalisation of a company produces unambiguous results regarding the informativeness of trades, with indices that small firms are more informative in purchase transactions and less in sales. This study contributes to the existing literature by providing a focused analysis of insider trading within the less regulated and more volatile Nasdaq Firth North Growth Market. Future research could extend this study by further investigating sales transactions, or by conducting a comparative analysis examining how insider trading effects vary between more and less regulated markets.