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Insider Trading and Networked Directors

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  • Renneboog, Luc

    (Tilburg University, School of Economics and Management)

  • Goergen, M.
  • Zhao, Y.

Abstract

We analyze the relation between insider trading and the networks of executive and non-executive directors in UK listed companies. While most existing studies focus on firm-specific private information, we find that non-firm-specific information – such as information on other companies and information on industry and market trends – plays an important role in insider trading behavior and performance. Well-connected directors trade shares less frequently and for smaller values. However, their transactions are more profitable, especially when they make consecutive opportunistic purchases in the multiple companies on whose boards they sit. Taken together, well-connected directors are likely to outperform their peers with inferior connections.
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  • Renneboog, Luc & Goergen, M. & Zhao, Y., 2018. "Insider Trading and Networked Directors," Other publications TiSEM c435e408-7658-4e25-bf8e-0, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:c435e408-7658-4e25-bf8e-0653dc33ced2
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    Cited by:

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    8. Millicent Chang & John Gould & Yuyun Huang & Sirimon Treepongkaruna & Joey Wenling Yang, 2022. "Insider trading and the algorithmic trading environment," International Review of Finance, International Review of Finance Ltd., vol. 22(4), pages 725-750, December.
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    More about this item

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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