The Impact of Personal Attributes on Corporate Insider Trading

40 Pages Posted: 5 Mar 2013 Last revised: 12 Nov 2014

See all articles by David Hillier

David Hillier

University of Strathclyde - Department of Accounting and Finance

Adriana Korczak

University of Bristol - School of Economics, Finance and Management

Piotr Korczak

University of Bristol - Department of Finance and Accounting

Date Written: November 12, 2014

Abstract

We analyze the importance of personal attributes in explaining the performance of reported share transactions by corporate insiders. While prior literature has focused on observable firm and trade characteristics, little effort has been made to understand how individual attributes, such as skills, abilities, or personality, impact upon post-trade abnormal returns. We document that personal attributes explain up to a third of the variability in insider trading performance and dominate unobservable and observable firm and trade characteristics by a sizeable margin. Personal attributes are correlated with the insider’s year of birth, education and gender, and matter more in companies with greater information asymmetry and when outsiders are inattentive to public information. We shed also new light on the significance of executive hierarchy and regulations in explaining insider trading performance and highlight the importance of controlling for individual fixed effects in insider trading research to avoid omitted variable bias in estimated regression coefficients.

Keywords: Insider Trading; Abnormal Returns; Fixed Effects

JEL Classification: G12, G14

Suggested Citation

Hillier, David and Korczak, Adriana and Korczak, Piotr, The Impact of Personal Attributes on Corporate Insider Trading (November 12, 2014). Available at SSRN: https://ssrn.com/abstract=2228090 or http://dx.doi.org/10.2139/ssrn.2228090

David Hillier

University of Strathclyde - Department of Accounting and Finance ( email )

Curran Building
100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 330 4809 (Phone)
44 0141 330 4442 (Fax)

Adriana Korczak

University of Bristol - School of Economics, Finance and Management ( email )

8 Woodland Road
Bristol, BS8 1TN
United Kingdom
+441173941490 (Phone)

Piotr Korczak (Contact Author)

University of Bristol - Department of Finance and Accounting ( email )

8 Woodland Road
Bristol BS8 1TN
United Kingdom
+44 117 394 1491 (Phone)

HOME PAGE: http://sites.google.com/view/piotrkorczak/home

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