Are Insider Sales Under 10b5-1 Plans Strategically Timed?

36 Pages Posted: 6 Jul 2008 Last revised: 9 Jul 2008

See all articles by Rik Sen

Rik Sen

University of New South Wales (UNSW)

Multiple version iconThere are 2 versions of this paper

Date Written: June 30, 2008


Previous research and numerous media articles suggest that sales executed under 10b5-1 trading plans are strategically timed. However, we find no significant difference in stock price performance following plan sales and non-plan sales. We demonstrate that price contingent orders (e.g. limit orders), a common feature in trading plans, give rise to empirical patterns that have been taken as evidence of strategic timing of sales. Event study methods employed in previous research on plan sales are shown to give biased estimates of post-event abnormal returns when the events are not exogenous to past returns.

Keywords: insider trading, SEC Rule 10b5-1, event studies

JEL Classification: G14, G18, K22

Suggested Citation

Sen, Rik, Are Insider Sales Under 10b5-1 Plans Strategically Timed? (June 30, 2008). Available at SSRN: or

Rik Sen (Contact Author)

University of New South Wales (UNSW) ( email )

High St
Sydney, NSW 2052

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