TY - JOUR
T1 - The impact of personal attributes on corporate insider trading
AU - Hillier, David
AU - Korczak, Adriana
AU - Korczak, Piotr
PY - 2015/2
Y1 - 2015/2
N2 - We analyze the importance of personal attributes in explaining the performance of reported share transactions by corporate insiders. While prior literature has focused on observable firm and trade characteristics, little effort has been made to understand how individual attributes, such as skills, abilities, or personality, impact upon post-trade abnormal returns. We document that personal attributes explain up to a third of the variability in insider trading performance and dominate unobservable and observable firm and trade characteristics by a sizeable margin. Personal attributes are correlated with the insider’s year of birth, education and gender, and matter more in companies with greater information asymmetry and when outsiders are inattentive to public information. We shed also new light on the significance of executive hierarchy and regulations in explaining insider trading performance and highlight the importance of controlling for individual fixed effects in insider trading research to avoid omitted variable bias in estimated regression coefficients.
AB - We analyze the importance of personal attributes in explaining the performance of reported share transactions by corporate insiders. While prior literature has focused on observable firm and trade characteristics, little effort has been made to understand how individual attributes, such as skills, abilities, or personality, impact upon post-trade abnormal returns. We document that personal attributes explain up to a third of the variability in insider trading performance and dominate unobservable and observable firm and trade characteristics by a sizeable margin. Personal attributes are correlated with the insider’s year of birth, education and gender, and matter more in companies with greater information asymmetry and when outsiders are inattentive to public information. We shed also new light on the significance of executive hierarchy and regulations in explaining insider trading performance and highlight the importance of controlling for individual fixed effects in insider trading research to avoid omitted variable bias in estimated regression coefficients.
KW - insider training
KW - abnormal returns
KW - fixed effects
UR - http://www.scopus.com/inward/record.url?scp=84920884283&partnerID=8YFLogxK
U2 - 10.1016/j.jcorpfin.2014.12.003
DO - 10.1016/j.jcorpfin.2014.12.003
M3 - Article
AN - SCOPUS:84920884283
VL - 30
SP - 150
EP - 167
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
SN - 0929-1199
ER -