Mendoza School of Business

When director deals matter

Published: November 16, 2018 / Author: Money Week

Finance Professor Peter Kelly is quoted in a Money Week article which speaks to using the behavior of a company’s directors as a tool for deciding when to sell stock at a loss.

Yet as Kelly notes, if directors are selling at a loss, it should be a far more sinister sign for investors in the stock in question. “Since selling at a loss is painful, an investor who does so must have particularly negative information, information that manifests itself in a poor stock return over the next few months.”