Regulated and unregulated insider trading around earnings announcements

This paper analyses insider trading behaviour around annual and interim earnings announcements during changing legislative environments in Sweden from 1980 to 2003. Using a unique data set, we are able to explore the nature of insider trading patterns from unregulated to strongly regulated insider trading markets. We find limited evidence of opportunistic insider trading. Insiders seem to be reluctant to sell stocks before positive earnings announcements. They also tend to time their trades in conjunction with an immediate post-announcement period, i.e. "safety trading", which becomes more evident within stronger legislation environments. Some support for contrarian trading behaviour is also found.