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Insider Trading and Networked Directors

Lookup NU author(s): Dr Yang Zhao



This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND).


We analyze the relation between insider trading and the networks of executive and non-executive directors in UK listed companies. While most existing studies focus on firm-specific private information, we find that non-firm-specific information – such as information on other companies and information on industry and market trends – plays an important role in insider trading behavior and performance. Well-connected directors trade shares less frequently and for smaller values. However, their transactions are more profitable, especially when they make consecutive opportunistic purchases in the multiple companies on whose boards they sit. Taken together, well-connected directors are likely to outperform their peers with inferior connections.

Publication metadata

Author(s): Goergen M, Renneboog L, Zhao Y

Publication type: Article

Publication status: Published

Journal: Journal of Corporate Finance

Year: 2019

Volume: 56

Pages: 152-175

Print publication date: 01/06/2019

Online publication date: 12/02/2019

Acceptance date: 06/02/2019

Date deposited: 07/02/2019

ISSN (print): 0929-1199

ISSN (electronic): 1872-6313

Publisher: Elsevier BV


DOI: 10.1016/j.jcorpfin.2019.02.001


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