Political Connections and the Informativeness of Insider Trades

• 成果类型: Article
• 署名作者: Jagolinzer, Alan D.; Larcker, David F.; Ormazabal, Gaizka; Taylor, Daniel J.
• 署名单位: University of Cambridge; Stanford University; University of Navarra; IESE Business School; University of Pennsylvania
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12899
• 发表日期: 2020
• 页码: 1833-1876
• 关键词: DIRECTORS; returns; boards; side

摘要

We analyze the trading of corporate insiders at leading financial institutions during the 2007 to 2009 financial crisis. We find strong evidence of a relation between political connections and informed trading during the period in which Troubled Asset Relief Program (TARP) funds were disbursed, and that the relation is most pronounced among corporate insiders with recent direct connections. Notably, we find evidence of abnormal trading by politically connected insiders 30 days in advance of TARP infusions, and that these trades anticipate the market reaction to the infusion. Our results suggest that political connections can facilitate opportunistic behavior by corporate insiders.