OUTSIDE DIRECTOR TRADING BEHAVIOR AROUND SEASONED EQUITY OFFERINGS

While outside director board concentration (ODBC) Levels have risen, research Looking into the role that outside directors (OD) play in aligning shareholder and managerial interests has been inconclusive. This paper addresses the issue of OD effectiveness through focusing more fundamentally upon their allegiance as evidenced by the trading patterns of OD surrounding an event widely associated with declining shareholder wealth - the seasoned equity offering. Not only. do OD significantly increase net sales in response to the offering, they tend to more highly concentrate their net sales before the offering than all other insiders and inside directors. Further, the concentration of net sales activity by OD is most prevalent in firms with the highest ODBC levels, suggesting that rising ODBC Levels as a means to more effectively influence management as shareholders would prefer are misguided.