What are directors' dealings?

When a director or directors of a company buy or sell shares, these trades are known as directors' dealings. The dealings are in the public domain and are often considered a good indicator of a company's future prospects.

Where have you heard about directors' dealings?

Directors' dealings often get more attention from the press than outsiders' dealings because directors are thought to know more about their company's prospects.

What you need to know about directors' dealings.

Many investors watch to see when directors are buying shares in their own companies because they think this indicates that the company will do well and is worth investing in. This is not necessarily the case. Directors also sell their shares for personal reasons and not because a company has a bleak future. How and when this occurs is crucial as acting before information is in the public domain can bring charges of ‘insider trading’ to the parties involved.

At set times of the year, such as before the presentation of a company's annual figures, directors' dealings are usually prohibited. If they weren't, analysts might look at them for clues as to how the company is doing, instead of looking at the figures.