Investing Like an Insider : An Event Study Exploring the Possibilities of Positive Return for Outside Investors Following an Insider's Behavior

This study aims to investigate if an outside investor can gain positive return from investing in company stocks on the Swedish stock market following published announcements of insider stock purchases done through the Swedish financial regulatory authority Finansinspektionen’s public insider transaction registry. Studying a total of 5 966 announced stock purchases during the period 2014 – 2018, the study finds significant positive abnormal return over all studied time periods following the announcement date, regardless of differences in company size. Highest return was found in smaller companies, at the cost of accepting a higher degree of risk. Despite significant results showing informational value of the announced purchases, economic gain from following insider behavior could be inhibited by the cost of investment and would require the outside investor to pick the right stock, which could prove difficult