What Do Bankers Know?

51 Pages Posted: 26 Dec 2012 Last revised: 15 Jun 2016

See all articles by Renee B. Adams

Renee B. Adams

University of Oxford; ABFER

Yanhui Wu

Queensland University of Technology - School of Economics and Finance; Financial Research Network (FIRN)

Qiaoqiao Zhu

Australian National University (ANU) - College of Business and Economics; Financial Research Network (FIRN)

Date Written: December 26, 2012

Abstract

We examine insider trades of bankers as a measure of how much they know relative to outsiders. In contrast to trades of insiders in non-financial firms, trades by bankers are less informative. Although bankers are relatively better at timing their sales, they earn negative long-run abnormal returns on their purchases. This is in marked contrast to insiders in non-financial firms. Even though banks are supposedly more opaque during the crisis, bank insider trades are still relatively uninformative during this period. These results are not driven by differences in idiosyncratic volatility, firm size, governance and compensation structures or routine versus opportunistic trades. Our results suggest that even if banks are transparent according to many standard measures, they are difficult to understand — even for insiders.

Keywords: Banks, Insider trading, Information, Governance

JEL Classification: G21, G14

Suggested Citation

Adams, Renée B. and Wu, Yanhui and Zhu, Qiaoqiao, What Do Bankers Know? (December 26, 2012). FIRN Research Paper; ECGI - Finance Working Paper. Available at SSRN: https://ssrn.com/abstract=2193986 or http://dx.doi.org/10.2139/ssrn.2193986

Renée B. Adams (Contact Author)

University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

ABFER

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Yanhui Wu

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Qiaoqiao Zhu

Australian National University (ANU) - College of Business and Economics ( email )

Canberra, Australian Capital Territory 2601
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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