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Disaster response: The COVID-19 pandemic and insider trading around the world

Author

Listed:
  • Hoang, Khanh
  • Nguyen, Cuong
  • Nguyen, Harvey
  • Vo, Lai Van

Abstract

This paper investigates how corporate insiders respond to the initial COVID-19 outbreaks. Using comprehensive insider transaction data from 25 countries, we document a consistent pattern of insider selling during the month after the first COVID-19 case is confirmed in a given country. Insider selling during these disease outbreaks is less pronounced in countries with higher information disclosure requirements, higher public enforcement index, a more efficient judiciary system, and stronger investor protection. Furthermore, cultural differences and the stringency levels of government responses to the COVID-19 outbreaks help moderate insider panic selling when health disasters strike. The findings suggest that a transparent, reliable business system contributes to rebuilding investor trust and corporate resilience during crises.

Suggested Citation

  • Hoang, Khanh & Nguyen, Cuong & Nguyen, Harvey & Vo, Lai Van, 2023. "Disaster response: The COVID-19 pandemic and insider trading around the world," Global Finance Journal, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:glofin:v:56:y:2023:i:c:s1044028323000091
    DOI: 10.1016/j.gfj.2023.100814
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    More about this item

    Keywords

    COVID-19 pandemic; Health crises; Insider trading; Pandemic responses; Investor trust; Crisis management;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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