Zhu, Yushu; Gippel, Jennifer
We examine whether disclosure of complex information events reduces information asymmetry by investigating the long- and short-term impact of firms' disclosure of debt covenant violations on the probability of informed trading. We argue debt covenant violation disclosures provide informed agents with a long window of opportunity to trade on their private information largely due to the uncertainty arising from the debt renegotiation process. We find the probability of informed trading is greater...[Show more]
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