Analyst Tipping: New Evidence from Directional Options Trading Volume and FINRA Rule 2241
Friday 1 November 2024, 10:15am to 11:30am
Venue
WEL - Welcome Centre LT2 A23 - View MapOpen to
Postgraduates, StaffRegistration
Registration not required - just turn upEvent Details
Accounting and Finance, Accounting seminar to be presented by Zacharias Petrou, University of Liverpool. Paper title: Analyst Tipping: New Evidence from Directional Options Trading Volume and FINRA Rule 2241
Zacharias Petrou - Management School - University of Liverpool
Abstract
We study the predictive information content of directional options trading volume for
stock returns following analyst recommendations. We observe that options volume related
to open buy positions is particularly informative immediately before the announcement day,
in line with the prevailing tipping hypothesis. Moreover, following the implementation of
FINRA Rule 2241 in December 2015, aimed at curtailing tipping practices, our difference-indifferences
approach reveals the curbing of analyst tipping in subsequent years. Our findings
remain robust across sub-samples, additional tests, and after accounting for several control
variables.
Keywords: Option Trading; Option Signed Volume; Analyst Recommendation; Analyst Tipping;
FINRA Rule 2241.
JEL classification: G1, G12, G14, G24, G28.
Speaker
University of Liverpool
Zacharias Petrou holds a degree in Applied Mathematical & Physical Sciences from the National Technical University of Athens. He also holds two MSc from the University of Texas at Austin (Engineering Mechanics, Energy & Earth Resources) and a PhD in Finance from the University of Cyprus. His research interests lie primarily in the area of empirical market-based accounting and corporate finance. More specifically his research focuses on the role of financial analysts, and financial information in
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