Evidence contrasting U.S. insider trades in high- and low-jeopardy periods and across firms at high
and low risk for 10b-5 litigation indicates that insiders condition their trades on foreknowledge of
price-relevant public disclosures, but avoid profitable trades when the jeopardy associated with such
trades is high, such as immediately before earnings announcements. Insiders avoid profitable trades
before quarterly earnings are announced and sell (buy) after good (bad) news earnings
announcements. Insiders trade most heavily after earnings announcements and profit from
foreknowledge of price-relevant information in the forthcoming Form 10-K or 10-Q filing.