To Benefit from Uncertainty

Sammanfattning: Research suggests that increasing R&D activities and uncertainty amplify market reactions following corporate news. We analyze insider transactions in biotechnological, life sciences and pharmaceutical companies listed on the NYSE, AMEX and Nasdaq during COVID-19. Cumulative abnormal returns are investigated with an event study following the filings of insider trades during times of uncertainty. We find that the market reacts stronger to insider transactions during COVID-19 compared to normal times. Additionally, we find that purchase transactions, compared to sales transactions, are perceived as more informative to market investors. Our evidence partly suggests that the insider's position affects the trade's signaling value to outsiders.