Construction
Construction and building: what insider dealings can and cannot tell you
Order books and long contracts
Builders, civil engineering contractors and building materials suppliers work on projects that run over several years. Management sees order intake, tender outcomes and cost overruns on large sites before they reach the accounts. That is the kind of private information insider trading studies look for, and the kind that market abuse rules forbid trading on before publication.
Evidence from the housing boom
Construction firms appear in research mostly as a comparison group. Shen, Hui and Fan (2021, Journal of Real Estate Finance and Economics) studied REIT insiders from 1996 to 2010 and found that they reduced their holdings during the boom, as early as 2004, and cashed out more aggressively than insiders at real estate and construction firms. The authors read this as informed trading by REIT insiders. The finding concerns REITs and leaves open what construction insiders knew.
Selling before the earnings turn
Ke, Huddart and Petroni (2003, Journal of Accounting and Economics) report that, in a broad US sample, insider selling rose in the quarters before a streak of earnings increases ended. In a cyclical business such as construction, that is the pattern to keep in mind when sales by several executives accumulate while reported results still look strong. The pattern describes an average across many firms.