Over 40% of insider trades are clustered, i.e., multiple insiders place the same directional trades on the same day or over consecutive days. This paper examines the information content of the cluster trades and the corresponding stock price adjustments. Cluster trades, in particular, purchases are more informative than non-cluster trades. While cluster trades on average accelerate the stock price adjustments, the information contained in long-lasting cluster trades is exceptionally strong and slowly incorporated into the stock price even after the trading disclosures. Finally, we find that cluster trades of informed insiders are more likely to occur in the circumstances where the firm information is more accessible to outside investors and where the insider trades are required to be disclosed sooner, suggesting that cluster trades are facilitated by the trading competition among informed insiders and outside investors. 

Keywords: Insider Trading, Cluster Trades, Market Efficiency
JEL Classification Number: G11, G23, G32​