Abstract
We investigate the determinants of insider trading and its effects on the levels of stock price informativeness in Brazil. We use corporate insider trading data for companies included in the IBrX-100 index between December 2016 and June 2018. In our standard sample, our findings indicate that insiders tend to trade in high liquidity months, and this behavior hampers the detection of adverse selection. Also, insider trading seems to be irrelevant to efficiency. Our study indicates that greater trading transparency is essential for outsiders to increase market efficiency since trading alone does not provide such a scenario. We suggest caution in the use of low-frequency liquidity measures for adverse selection detection in this market.
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