Work

Managerial foresight and attempted rent appropriation: insider trading on knowledge of imminent breakthroughs

Year: 2005

Type: article

Abstract: In order to establish a competitive advantage, firms must acquire or create resources at a price below their value in use. Absent pure luck, this requires managers to exercise foresight about a resource's future value and/or complementarities with pre‐existing capabilities. This foresight grants managers the opportunity to exploit information asymmetries for personal gain as well as building organizational capabilities. Nevertheless, there is limited research on the extent of foresight or how managers use it. In our study of insider trading, we found that managers purchase stock well before breakthrough patents are filed. We argue for further research on the extent of managerial foresight and how it affects rent generation and appropriation. Copyright © 2005 John Wiley & Sons, Ltd.

Source: Strategic Management Journal

DOI: 10.1002/smj.474

Authors: Gautam Ahuja, Russell W. Coff, Peggy M. Lee

Institutions: University of Michigan, University of Wisconsin–Madison, Emory University, Arizona State University

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: bronze

Funder: Arizona State University

OpenAlex ID: W2037900397

FWCI: 11.95

Cites: 51

Cited by: 201

Related to: 10