Download This PaperFlying below the radar: Insider trading by executives below the top
72 Pages Posted: 8 Nov 2021 Last revised: 5 Dec 2023
Date Written: November 1, 2021
Abstract
To enforce insider trading laws, financial regulators require top executives in listed companies to
make their own-company trades public. One implication of this regulatory focus is that many executives below the top fly under the radar. We use administrative register data from Norway to examine whether executives below the top earn abnormal returns on purchases of own-company stock. We show evidence of positive abnormal returns of such trades. The estimates are economically significant: about 50 to 100 basis points at the 1-month horizon. The abnormal returns do not seem to be explained by industry knowledge or general stock-picking ability.
Keywords: insider trading, executives, employees, regulation
JEL Classification: G30, G32, G38
Suggested Citation: Suggested Citation
