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Does CSR compensate for global institutional voids? Corporate insider trading as a test of transaction ethics

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Listed:
  • Carran, Sophie
  • Hodgson, Allan
  • Saudagaran, Shahrokh M.
  • Xiong, Zhengling

Abstract

CSR is now a global phenomenon. We ask whether a high-CSR rating presupposes a strong internal firm culture that constrains corporate insider profitability—even when there are country-wide institutional voids. We find that a high-CSR rating is only a dominant ethical proxy in Anglo-Saxon common-law countries with reduced purchase and sale profitability—consistent with strong institutions and a legal culture of investor protection. In higher rated CSR European code-law and Asian countries, rent seeking from insiders is generally higher. A stronger result is CSRs greater constraint against insider selling—reflecting a response for insurance against shareholder and social censure. Results suggest that CSR and the degree of insider trading are embedded within wider political and informal institutions.

Suggested Citation

  • Carran, Sophie & Hodgson, Allan & Saudagaran, Shahrokh M. & Xiong, Zhengling, 2026. "Does CSR compensate for global institutional voids? Corporate insider trading as a test of transaction ethics," Pacific-Basin Finance Journal, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:pacfin:v:97:y:2026:i:c:s0927538x26000508
    DOI: 10.1016/j.pacfin.2026.103104
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