Corporate Insider Trading The cumulative abnormal returns pattern for British insider trading (Figure 13.7) suggests that executives have private information that they exploit to their advantage. Is there a behavioural interpretation for the pattern? Does this violate any of the three forms of market efficiency? Explain.

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Figure 13.7 Cumulative Abnormal Returns from UK Director Trading CAR (%) NJ -50 -40 -30 -20 -10 0 10 20 20 -2 Days CAR purchases (1999-2013) CAR sales (1999-2013) 30 40 50