Abstract

http://ssrn.com/abstract=2170102
 


 



The People in Your Neighborhood: Evidence of Local Information Leakage Around Corporate Headquarters When Insiders Trade


Thomas C. Omer


University of Nebraska at Lincoln - School of Accountancy

Darren T. Roulstone


Ohio State University (OSU) - Fisher College of Business

Nathan Y. Sharp


Texas A&M University - Department of Accounting

Brady J. Twedt


Indiana University - Kelley School of Business

November 1, 2012


Abstract:     
This study adds to the literature on the existence of information asymmetries in financial markets by investigating whether information leakage occurs in the local geographic area surrounding corporate headquarters at the time of nonpublic corporate events. On days when a corporation’s headquarters city is the top location for Google searches for company-specific financial information, we find that insider selling is positively associated with the volume of Google search. This result is consistent with information leakage in close proximity to corporate headquarters before news of insider selling is public. In addition, we find that insider selling is negatively associated with Google search volume when the top search location is away from corporate headquarters, consistent with insiders avoiding selling shares around public information events. We also find more negative future abnormal returns when local information search is high at the time of insider selling. Collectively, our results provide evidence consistent with a local information advantage near corporate headquarters when insiders sell their shares.

Number of Pages in PDF File: 36

Keywords: Insider trading, information search, information leakage, Google Trends

JEL Classification: G14, G30, D82, D83, K22, M52

working papers series


Download This Paper

Date posted: November 3, 2012  

Suggested Citation

Omer, Thomas C. and Roulstone, Darren T. and Sharp, Nathan Y. and Twedt, Brady J., The People in Your Neighborhood: Evidence of Local Information Leakage Around Corporate Headquarters When Insiders Trade (November 1, 2012). Available at SSRN: http://ssrn.com/abstract=2170102 or http://dx.doi.org/10.2139/ssrn.2170102

Contact Information

Thomas C. Omer
University of Nebraska at Lincoln - School of Accountancy ( email )
307 College of Business Administration
Lincoln, NE 68588-0488
United States
Darren T. Roulstone
Ohio State University (OSU) - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States

Nathan Y. Sharp (Contact Author)
Texas A&M University (TAMU) - Department of Accounting ( email )
430 Wehner
College Station, TX 77843-4353
United States
979-845-0338 (Phone)

Brady J. Twedt
Indiana University - Kelley School of Business ( email )
1309 E. 10th Street
Bloomington, IN 47405
United States
Feedback to SSRN


Paper statistics
Abstract Views: 528
Downloads: 103
Download Rank: 148,056

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.360 seconds