Commitment to Social Good and Insider Trading

58 Pages Posted: 3 Sep 2012 Last revised: 10 Dec 2018

See all articles by Feng Gao

Feng Gao

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Ling Lei Lisic

Virginia Polytechnic Institute & State University - Pamplin College of Business

Ivy Zhang

University of California, Riverside

Date Written: March 2014

Abstract

A firm’s investment in corporate social responsibility (CSR) builds a positive image of caring for social good and imposes additional costs on executives’ informed trading, which is widely perceived self-serving. We thus expect executives of CSR-conscious firms to be more likely to refrain from informed trading. We find that executives of CSR-conscious firms profit significantly less from insider trades and are less likely to trade prior to future news than executives of non-CSR-conscious firms. The negative association between CSR and insider trading profits is more pronounced when executives’ personal interests are more aligned with the interests of the firm.

Keywords: corporate social responsibility, insider trading

JEL Classification: M14, G10

Suggested Citation

Gao, Feng and Lisic, Ling Lei and Zhang, Ivy, Commitment to Social Good and Insider Trading (March 2014). Journal of Accounting & Economics (JAE), Vol. 57, Issue 2-3, pp.149-175, 2014, Available at SSRN: https://ssrn.com/abstract=2140193 or http://dx.doi.org/10.2139/ssrn.2140193

Feng Gao

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

Janice H. Levin Bldg., Room 121
94 Rockafeller Road
Piscataway, NJ 08854-8054
United States

Ling Lei Lisic

Virginia Polytechnic Institute & State University - Pamplin College of Business ( email )

3007 Pamplin Hall
Blacksburg, VA 24061
United States

Ivy Zhang (Contact Author)

University of California, Riverside ( email )

900 University Ave
Riverside, CA 92521
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
481
Abstract Views
3,426
rank
67,718
PlumX Metrics