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Commitment to social good and insider trading

Author

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  • Gao, Feng
  • Lisic, Ling Lei
  • Zhang, Ivy Xiying

Abstract

A firm׳s investment in corporate social responsibility (CSR) builds a positive image of caring for social good and imposes additional costs on executives׳ informed trading, which is widely perceived self-serving. We thus expect executives of CSR-conscious firms to be more likely to refrain from informed trading. We find that executives of CSR-conscious firms profit significantly less from insider trades and are less likely to trade prior to future news than executives of non-CSR-conscious firms. The negative association between CSR and insider trading profits is more pronounced when executives׳ personal interests are more aligned with the interests of the firm.

Suggested Citation

  • Gao, Feng & Lisic, Ling Lei & Zhang, Ivy Xiying, 2014. "Commitment to social good and insider trading," Journal of Accounting and Economics, Elsevier, vol. 57(2), pages 149-175.
  • Handle: RePEc:eee:jaecon:v:57:y:2014:i:2:p:149-175
    DOI: 10.1016/j.jacceco.2014.03.001
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    More about this item

    Keywords

    Corporate social responsibility; Insider trading;

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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