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

Gautam Ahuja; Russell W. Coff; Peggy M. Lee

doi:10.1002/smj.474

journal article Jun 07, 2005

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

Gautam Ahuja Russell W. Coff Peggy M. Lee

Strategic Management Journal Vol. 26 No. 9 pp. 791-808 · Wiley

View at Publisher Save 10.1002/smj.474

Abstract

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.

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References

Details

Published: Jun 07, 2005
Vol/Issue: 26(9)
Pages: 791-808
License: View

Authors

G

Gautam Ahuja

Ross School of Business, University of Michigan

W.P. Carey School of Business, Arizona State University, Tempe, Arizona 85287

Cite This Article

Gautam Ahuja, Russell W. Coff, Peggy M. Lee (2005). Managerial foresight and attempted rent appropriation: insider trading on knowledge of imminent breakthroughs. Strategic Management Journal, 26(9), 791-808. https://doi.org/10.1002/smj.474

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

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