It’s a fair assumption that managers will have a better insight into the financial state of the company they’re running than outside investors. A manager will act and make decisions that are based around what they perceive the outlook for that company to be.

It’s also assumed that when a company makes a corporate action, such as a share buyback, a merger, a dividend or an equity issue, as soon as it’s announced, the market factors that into the price to reflect the potential long term impact of the decision. Read more »