This paper contributes to explaining the benefit-cost puzzle of insider trading activity. We show that net insider purchase is a convex function of the quarterly earnings surprise decile in terms of mean, median, and purchase frequency. The convexity suggests that the magnitude of net insider purchases is positively associated with information asymmetry. Further evidence indicates that the majority of insider purchases are not designed to earn abnormal returns; instead, they signal firm quality when firms are in adverse situations and fight against short sellers when short interest is high.

中文翻译：

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内幕交易的双重目的：信号质量和对抗空头

本文有助于解释内幕交易活动的收益成本之谜。我们表明，就均值、中位数和购买频率而言，净内幕购买是季度收益意外十分位数的凸函数。凸性表明内部人净购买的规模与信息不对称呈正相关。进一步的证据表明，大多数内幕交易并非旨在赚取异常回报；相反，当公司处于不利情况时，它们会发出公司质量的信号，并在空头利率高时与卖空者作斗争。