The impact of personal attributes on corporate insider trading

David Hillier, Adriana Korczak, Piotr Korczak

Research output: Contribution to journalArticle

16 Citations (Scopus)
273 Downloads (Pure)

Abstract

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.
Original languageEnglish
Pages (from-to)150-167
Number of pages18
JournalJournal of Corporate Finance
Volume30
Early online date18 Dec 2014
DOIs
Publication statusPublished - Feb 2015

Keywords

  • insider training
  • abnormal returns
  • fixed effects

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