Journal of Financial and Quantitative Analysis Vol. 58 No. 6 2023

Indirect Insider Trading

Brad Goldie^{1,2,3,4,5,6,7}; Chao Jiang^{1,2,3,4,5,6,7}; Paul D. Koch^{1,2,3,4,5,6,7}; M. Babajide Wintoki^{1,2,3,4,5,6,7}

¹ University of North Carolina at Charlotte · ² Florida State University · ³ Ivy Tech Community College of Indiana · ⁴ University of Kansas · ⁵ University of South Carolina · ⁶ Iowa State University · ⁷ Miami University

Abstract

Insiders must disclose indirect trades made through accounts they control, including family, trust, retirement, and foundation accounts. Indirect trades through these accounts are more profitable than direct trades in the insider’s own account. They are also more likely to be made by “opportunistic” insiders who make nonroutine trades, or who trade profitably before earnings announcements, or who have a short investment horizon. These trades contain more predictive information about earnings surprises and large price changes, and they tend to be made by insiders at firms with high information asymmetry. Insiders also make fewer indirect trades following periods of intense regulatory scrutiny.

DOI

10.1017/s0022109022001119

Volume

58

Issue

6

Pages

2327-2364

Language

en

Sources

bibtex:phds-export.bib crossref openalex

Cite

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