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Insider trading profitability in geographically diversified firms: does managerial ability matter?

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  • Chen Li
  • Mazhar Islam
  • Shantanu Dutta

Abstract

We examine the impact of managerial ability on insider trading profitability within geographically diversified firms, where operational complexity can potentially increase insider advantages. We analyse a sample of 54,899 insider purchase transactions and find that higher managerial ability significantly reduces the positive relationship between geographical diversification and insider trading profitability. Our mechanism tests suggest that managers with higher abilities make better information disclosure and collaborate with more capable boards, to reduce insider trading profitability. Our findings suggest that capable managers prioritize enhancing transparency and aligning interests with shareholders above personal financial gains, reducing opportunistic insider trading within geographically diverse firms.

Suggested Citation

  • Chen Li & Mazhar Islam & Shantanu Dutta, 2026. "Insider trading profitability in geographically diversified firms: does managerial ability matter?," Applied Economics Letters, Taylor & Francis Journals, vol. 33(6), pages 906-915, March.
    • Handle: RePEc:taf:apeclt:v:33:y:2026:i:6:p:906-915
    DOI: 10.1080/13504851.2024.2399748
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