We explore whether firm managers trade on future stock price crash risk. This depends on managers’ ability to assess future crash risk, and on whether the expected payoff is greater than the expected costs associated with potential reputation loss and litigation risk. We find that insider sales are positively associated with future crash risk, which is consistent with managers’ trading on crash risk for personal gain. We also find that managers take advantage of high information opacity to pursue crash-risk-based insider sales more aggressively, but are less able to capitalize on this in the case of financial constraints or post-SOX.

中文翻译：

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企业内部人士是否会利用未来的股价崩盘风险进行交易？

我们探讨公司经理是否对未来股价崩盘风险进行交易。这取决于管理人员评估未来崩溃风险的能力，以及预期收益是否大于与潜在声誉损失和诉讼风险相关的预期成本。我们发现内幕交易与未来崩盘风险呈正相关，这与管理者为了个人利益而利用崩盘风险进行交易是一致的。我们还发现，管理人员利用高度信息不透明度更积极地追求基于崩溃风险的内部销售，但在财务限制或后 SOX 的情况下，则不太能够利用这一点。