"Evening News: Informativeness from the time-of-day insider trades are disclosed"
Using Form 4 timestamps scraped from EDGAR, I examine whether corporate insiders strategically time the disclosure of trades. Trades disclosed in the evening are more profitable and better predict earnings surprises than those disclosed during the day, consistent with insiders capitalizing on limited investor attention. The incentive to disclose informed trades in the evening is particularly strong for insider sales. The profitability signal has decayed over time. Using difference-in-differences estimation surrounding the 2004 insider trading coverage by Dow Jones, I document that the decline in evening disclosure profitability is partially driven by decreases in information acquisition costs.
Revise & Resubmit at Review of Corporate Finance Studies
Presented at the Southwestern Finance Association Annual Meeting (2025); University of Kansas (2024)
"Inferring corporate insiders’ beliefs about firm value from tax withholding elections" (with Tom Kubick and Jide Wintoki)
Exploiting tax withholding elections around equity compensation transactions, we find that transactions involving withholding for taxes predict annualized next month returns that are 4% – 8% lower than other transactions. The informativeness of tax withholding elections is stronger in the presence of greater information asymmetry and following personal tax rate changes. Tax withholding elections are more likely to occur in blackout trading periods than sales and are more predictive of earnings announcement surprises. Insiders eventually sued by the SEC change their tax withholding elections more frequently, and the informativeness of withholding is lower in the year of an SEC enforcement action.
Revise & Resubmit at Journal of Accounting Research
Presented at the University of North Carolina Tax Symposium (2025); Midwest Finance Association Annual Meeting (2025); Eastern Finance Association Annual Meeting (2025); Southwestern Finance Association Annual Meeting (2025); Southern Finance Association Annual Meeting (2024); Silicon Prairie Finance Conference (2024)
University of Kansas, School of Business Best Paper Award (2024)
"Does Macroeconomic Information from Artificial Intelligence Influence Households' Expectations and Behavior?" (with Will Bazley, Yosef Bonaparte, and Carina Cuculiza)
We experimentally examine whether artificial intelligence-generated information about aggregate risk influences households' economic expectations and behavior. Using random assignment of recession forecasts from AI models and professionals, we exogenously shift individuals’ beliefs. We find that individuals update their expectations in response to AI forecasts, typically placing comparable weight on them as on professional forecasts. Households extrapolate their revised beliefs to expectations about national unemployment, inflation, and firms' profitability, as well as to their personal financial outlooks and job security. Belief updates also affect consumption–savings allocations. Our findings indicate that households perceive AI-generated macroeconomic signals as credible and behaviorally relevant.
"Corporate Insiders as Value Investors" (with Felix Meschke and Jide Wintoki)
Insider trades are often predictive of a firm's future outcomes, largely due to insiders having access to privileged firm information. We propose a novel classification strategy to distinguish trades that are more or less likely to convey significant, unpriced information about the firm. Utilizing a recent asset pricing method developed by Bartram and Grinblatt (2018), our approach compares insider trading decisions to those an external value investor might make. We find that insider trades and share repurchases that align with this value investor’s recommendation do not predict future firm performance, while those in the opposite direction predict earnings surprises and reflect changes in Return on Assets (ROA). Our classification of insider transactions can be easily applied to a broad range of public companies and allows market participants to extract less noisy information about firms’ quality from insider trades.
Presented at the Financial Management Association Annual Meeting (2024); University of Kansas; Financial Management Association Annual Meeting (2023)
University of Kansas John O. Tollefson Best Paper Award (2024)
"Dog Whistling Retail: Management Rhetoric and Insider Stock Trades" (with Justin Balthrop and Jonathan Bitting)
We provide evidence that managers attempt to capitalize on the recent influx of retail-trader interest in short-squeezes. The use of short-squeeze “buzzwords” used in public firm disclosures has increased significantly since the GME short-squeeze, whereas the level of shorting activity has remained unchanged. Managers that use short-squeeze buzzwords are more likely to sell their insider holdings and issue equity in the month that follows the disclosure. The use of buzzwords is tempered by the presence of institutional ownership, but retail-investor attention does increase after a short-squeeze signal is given. These actions correlate to other potential manipulations such as BigR restatements.
“Benefits of Transaction Fees? How Transaction Fees Affect Investor Behavior and Performance”
Reacting to recent market disruptions, retail brokerages are substituting the collection of revenue directly from investors for payments from market makers via a payment for order flow model. The shift has led some to argue that retail investors have never had better market access, while others lament the decreased salience of trading costs. Regulators across the globe are tasked with monitoring and deciding on this issue, with important ramifications to investor welfare at stake. Using a simulated stock market, I provide evidence on often undiscussed effects that per-trade commission fees have on investor trading behavior and outcomes. I find that the presence of trading commissions has negligible impacts on average for either the disposition effect or market participation and deteriorates participant trading decision quality. Fees are most beneficial for overconfident participants, eliminating the differences in disposition effect and rational trading decisions relative to non-overconfident participants. My findings are particularly useful for regulators who wish to weigh the costs and benefits of policy changes on individual investors.