The Effect of Insider Trading on Value Relevance of Research and Development Expenditures

• Main Authors: Chen, hsin min, 陳欣敏
• Other Authors: Hsu, Shu-Wei
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/70190398547063798870

碩士 === 東海大學 === 會計學系 === 101 === This study examines the association between insider trading and the relevance value of research and development expenditures (R&D). The future economic benefits of R&D are highly uncertain and only the amounts expensed during the period are disclosed in the company’s financial statement. Prior studies show that insider trading not only conveys private information to outsiders, but also serves as a leading indicator of the reliability of voluntary disclosure. Therefore, this study investigates whether insider trading during the fiscal year improve the relevance value of R&D. This study uses the data of insider trading and R&D from 2004 to 2012 in Taiwan. To investigate the effect of insider trading on the relevance value of R&D, both stock price model and stock return model are used. In addition, the stock price is the year-end stock price and the stock return is the market adjusted buy and hold returns. The results show that insider trading has a positive effect on the value relevance of R&D. Furthermore, by categorizing insider trading into buying and selling, the results show that insider buying have incremental positive effect on the value relevance of R&D, compared to insider selling. Overall, the results show that insider trading reveal insiders’ private information, enhancing the value relevance of R&D.