Tone emphasis and insider trading*

L Cheng, Qinglu Jin, Hui Ma

Research output: Contribution to journalJournal

1 Citation (Web of Science)


In this study, we examine whether emphasized tone in earnings releases systematically predict managers' insider trading activities in the post earnings releases periods and whether managers' choices of tone placement in earnings releases are motivated by opportunistic incentives. We find that, holding constant the net tone of the overall document, managers make more insider sales (purchases) immediately after earnings releases when positive (negative) tone is presented more prominently in the document. In addition, we document that the relation between tone emphasis and the observed insider trading activities is more (less) pronounced when insiders have greater information advantage or when a firm's overall information environment is more opaque (when a firm has better corporate governance). Overall, our findings suggest that managers use narrative characteristics strategically to facilitate their insider trading and achieve personal gains.
Original languageEnglish
Article number102419
Number of pages21
JournalJournal of Corporate Finance
Publication statusPublished - Jan 2023


  • Earnings releases
  • Insider trading
  • Narrative characteristics
  • Strategic disclosure
  • Tone emphasis

Indexed by

  • ABDC-A*
  • SSCI


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