Overheard: Board Members’ Trades
One benefit of getting on a company’s board of directors: You get better at trading its stock.
Corporate boards gather several times a year, but U.S. regulations don’t require them to say when. That makes it close to impossible to figure out whether board members trade based on what is getting discussed. But as New York University accounting graduate student Seil Kim discovered, it isn’t completely impossible. By digging through corporate bylaws, Mr. Kim was able to hand-collect regularly scheduled meeting times for over 100 companies. Examining those dates, he found material news is more likely to get released on the day of a board meeting and the day immediately following. He then looked at the performance of stock purchases by outside directors immediately before board meetings. The finding: They outperformed....HT: goingconcern's News Roundup
