Abstract
We examine how insider trading affects market responses to subsequent analyst forecast revisions in a global setting. We find stronger market responses to analyst forecast revisions subsequent to the insider trading than to other revisions. This stronger response is mainly driven by analyst forecast revisions that are in the same direction as the previous insider trading signal. In further analyses, we find that the market responses are stronger to analyst forecast revisions that follow insider sales for the US data, but stronger to revisions that follow insider purchases for the international data. Overall, our study suggests that investors view analyst forecast revisions as having different information content conditional on the existence and direction of previous insider trading signals and that investors seem to respond to both the analyst signal and the previous insider signal at the time analysts revise their forecasts, although the prior insider trading signal have been publicly known.
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