Accrual Information and Insider Trading: An Empirical Analysis

Managers have the ability to time the disclosure of accrual information to outside investors. They have the choice of disclosing accrual information at the earnings announcement or waiting until the 10-Q or 10-K date. This paper examines whether managers profit from this ability by strategically disclosing or withholding accrual information when it increases their profits from trading shares of the firms they manage. This paper also examines if strong corporate governance restrains such managerial opportunism. The evidence is consistent with managers using their discretion over the timing of the release of accrual information to increase their trading profits. This paper finds no evidence of strong corporate governance mitigating this managerial opportunism.