Companies · Defense & Aerospace

We found no peer-reviewed study that measures how informative insider trades are in defence and aerospace companies. The paragraphs below describe how the sector works.

Contract awards as inside information

Defence revenue depends on large government contracts and programmes that run for years. In the United States, the Federal Acquisition Regulation (FAR 5.303) requires agencies to make award information above a dollar threshold available for announcement by 5 p.m. Washington time on the day of award, and forbids releasing it before that time. Until then, executives who know the outcome hold exactly the information that insider dealing rules target.

In the European Union, the Market Abuse Regulation bars managers from dealing in their company's shares during the 30 calendar days before an interim or year-end report, which shapes when defence executives' trades appear in the filings.

Civil aerospace and what a filing adds

Civil aerospace brings other exposures: aircraft deliveries, airline demand, supply chain bottlenecks. A purchase after a share price drop caused by a programme delay is the case the general research finds more telling, since Lakonishok and Lee (2001, Review of Financial Studies) locate the predictive content of insider trades in purchases rather than sales. Sales that follow the vesting of share-based pay say little about the business.