|
|
|
|
||||
|
||||
Are All Independent Directors Equally Informed? Evidence Based on Their Trading Returns and Social NetworksYing CaoChinese University of Hong Kong (CUHK) - School of Accountancy Dan S. DhaliwalUniversity of Arizona - Department of Accounting Zengquan LiShanghai University of Finance and Economics - School of Accountancy Yong George YangChinese University of Hong Kong (CUHK) - Faculty of Business Administration May 1, 2011 Abstract: We study the impact of social networks on the ability of independent directors to obtain private information from their firms’ executives. We find that independent directors socially connected to their firms’ senior executives earn significantly higher returns than unconnected independent directors in stock sales transactions, and the networks effect is stronger in firms with higher information asymmetry. Independent directors’ trading returns drop after their connected senior executives depart the firm. Finally, connected independent directors sell more stocks than unconnected directors prior to the announcement of bad earnings news. As a comparison to these results, the trading profits of connected and unconnected independent directors do not differ significantly in stock purchases. Taken together, our results suggest that social connections help independent directors gain access to private information from firms’ senior executives.
Number of Pages in PDF File: 33 Keywords: Social networks, insider trading, independent directors JEL Classification: G34; G38; M48 working papers seriesDate posted: May 1, 2011 ; Last revised: December 22, 2012Suggested CitationContact Information
|
|
|||||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo5 in 0.641 seconds
