Insider Trading Restrictions and Informed Trading in Peer Stocks

• 成果类型: Article
• 署名作者: Deuskar, Prachi; Khatri, Aditi; Sunder, Jayanthi
• 署名单位: Indian School of Business (ISB); Cornerstone Research; University of Arizona
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.02907
• 发表日期: 2025
• 关键词: insider trading regulation; Informed trading; information fungibility; liquidity; Price informativeness

摘要

Using a uniquely constructed data set of trades by corporate insiders in all stocks, we find that, after insider trading regulations become stricter, insiders are 20% more likely to trade in peer stocks and that such trades become more profitable. The increase in both the probability and profitability of peer -stock trades is driven by the insider's information that is fungible to industry peers. Stricter insider trading laws are designed to improve liquidity and price informativeness in capital markets. We show that peer trading dampens these intended benefits of the insider trading regulation.