Attentive Insider Trading

49 Pages Posted: 2 Feb 2013 Last revised: 12 Sep 2014

See all articles by Dallin Alldredge

Dallin Alldredge

Florida International University

David C. Cicero

Harbert College of Business, Auburn University

Date Written: August 1, 2014


We provide evidence that some profitable insider stock selling is motivated by public information. At firms that disclose having concentrated sales relationships, insiders appear to sell their own stock profitably based on public information about their principal customers. Supplier insiders also sell more stock when public information about their customers’ recent returns and earnings surprises suggests they will earn larger profits. These results are stronger when outside investor attention could be lower. Outside of this setting, insiders engage in a higher proportion of routine sales and their sales are less profitable. We do not find similar patterns for insider purchases. These results call into question the extent to which insiders trade illegally on private information.

Keywords: insider trading, informed trading, inattention, supply chain

JEL Classification: G12, G14, G18

Suggested Citation

Alldredge, Dallin and Cicero, David C., Attentive Insider Trading (August 1, 2014). Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: or

Dallin Alldredge

Florida International University ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

David C. Cicero (Contact Author)

Harbert College of Business, Auburn University ( email )

415 Magnolia Ave.
Auburn, AL 36849
United States

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