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Journal of Financial and Quantitative Analysis Vol. 60 No. 5 2025

Investor Attention and Insider Trading

Sattar Mansi1; Lin Peng2; Jianping Qi3; Han Shi4

1 Virginia Tech Pamplin College of Business · 2 City University of New York Baruch College Zicklin School of Business · 3 University of South Florida Muma College of Business · 4 Louisiana State University Shreveport School of Business

open access

Abstract

We identify a new mechanism of opportunistic insider trading linked to attention-driven mispricing. Insiders are more likely to sell their company’s stock during periods of heightened retail attention and more inclined to buy when attention diminishes. The results are particularly pronounced for lottery-type stocks and firms with substantial retail ownership. We demonstrate that our findings—which relate to indicators of mispricing, retail order imbalances, and Robinhood herding episodes—extend to seasoned equity issuances and cannot be solely explained by firm fundamentals. Attention-based insider trading is less likely to result in SEC enforcement actions and persists across different regulatory regimes.

DOI
10.1017/s0022109024000450
Volume
60
Issue
5
Pages
2293-2333
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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