This study explores managerial insider trading as a function of differences between managers' and the market's assessment of company earning components - specifically operating cash flows and accruals. It builds a perspective of managers as sophisticated investors who, while engaging in earnings management, ultimately make insider trading decisions based on the divergence between their private valuation of earnings components and the market's. The study applies the methodological framework of the Mishkin (1983) test. It finds supporting evidence that insider buying behavior is consistent with...