Graduation Year

2022

Date of Submission

4-2022

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Eric Hughson

Abstract

Lockup expirations of insider trading for Initial Public Offerings (IPOs) act as a self-imposed event study opportunity within the finance and public market sector, giving unique post-event insight to subsequent insider trading decisions. This paper investigates whether investors can use insider trading after IPO lockup expiration to help predict short to medium-term firm abnormal returns. The paper builds upon prior research by using a similar calendar time approach and categorization method, while also utilizing a new insider trading categorization method abnormal returns calculation method in a more recent period of 2017-2021. The paper finds consistent insignificance across methodologies, with insider trading not having any indication of future short to medium-term returns. Overall, investors cannot justify using insider trading as an informed consideration when looking to invest in firms that have recently gone public.

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This thesis is restricted to the Claremont Colleges current faculty, students, and staff.

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