References (19)



Trading by Bank Insiders Before and During the 2007-2008 Financial Crisis

Peter Cziraki

University of Toronto - Department of Economics

December 8, 2015

This paper sheds new light on the role bank executives played in the financial crisis. It examines whether they foresaw the poor performance of their own bank by analyzing their insider trading patterns. Insider trading during 2006 predicts stock returns during the crisis: a portfolio strategy based on insider trading information earns a risk-adjusted return of over 40% during the crisis. Further, banks with a high exposure to the housing market and banks with a low exposure exhibit different insider trading patterns starting in mid-2006, when US housing prices first decline: insiders of high-exposure banks are 20% more likely to sell stock than insiders of low-exposure banks. However, insider trading patterns of high- and low-exposure banks do not differ before 2006. This evidence indicates that insiders of high-exposure banks revised their assessment of their banks’ investments following the reversal in the housing market.

Number of Pages in PDF File: 49

Keywords: insider trading, financial crisis, executive compensation

JEL Classification: G01, G14, G21

Open PDF in Browser Download This Paper

Date posted: November 22, 2011 ; Last revised: December 10, 2015

Suggested Citation

Cziraki, Peter, Trading by Bank Insiders Before and During the 2007-2008 Financial Crisis (December 8, 2015). Available at SSRN: http://ssrn.com/abstract=1962719 or http://dx.doi.org/10.2139/ssrn.1962719

Contact Information

Peter Cziraki (Contact Author)
University of Toronto - Department of Economics ( email )
150 St. George Street
Toronto, Ontario M5S3G7
+1 416 946 3298 (Phone)
HOME PAGE: http://www.economics.utoronto.ca/petercziraki
Feedback to SSRN

Paper statistics
Abstract Views: 2,306
Downloads: 541
Download Rank: 33,580
References:  19

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 0.312 seconds