BANKRUPTCY AND INSIDER TRADING - DIFFERENCES BETWEEN EXCHANGE-LISTED AND OTC FIRMS

Over the two-year period prior to the bankruptcy announcement, insider trading is significantly greater for OTC bankrupt firms, but not for exchange-listed firms, than for an industry-size matched sample of non bankrupt firms. In addition, the level of insider selling increases ov er the final five months leading to the first public announcement of O TC firms. Finally, firms displaying the most negative price reaction o ver the announcement period are found to have a significantly larger p roportion of insider selling than other firms.