Indirect Insider Trading

Journal of Financial and Quantitative Analysis

74 Pages Posted: 19 Nov 2018 Last revised: 26 Apr 2022

See all articles by Bradley A. Goldie

Bradley A. Goldie

Miami University

Chao Jiang

University of South Carolina - Department of Finance

Paul D. Koch

Iowa State University - Finance Department; Iowa State University - Finance Department

M. Babajide Wintoki

University of Kansas - School of Business

Date Written: March 15, 2022

Abstract

Insiders must disclose indirect trades made through accounts they control, including family, trust, retirement, and foundation accounts. Indirect trades through these accounts are more profitable than direct trades in the insider’s own account. They are also more likely to be made by “opportunistic” insiders who make non-routine trades, or who trade profitably before earnings announcements, or have a short investment horizon. These trades contain more predictive information about earnings surprises and large price changes, and they tend to be made by insiders at firms with high information asymmetry. Insiders also make fewer indirect trades following periods of intense regulatory scrutiny.

Keywords: Insider trading, informed trading, opportunism, trusts, retirement accounts, foundations.

JEL Classification: G12, G14, G18

Suggested Citation

Goldie, Bradley A. and Jiang, Chao and Koch, Paul D. and Wintoki, Modupe Babajide, Indirect Insider Trading (March 15, 2022). Journal of Financial and Quantitative Analysis, Available at SSRN: https://ssrn.com/abstract= or http://dx.doi.org/10.2139/ssrn.3270095

Bradley A. Goldie

Miami University ( email )

2029 Farmer School of Business
800 E. High Street
Oxford, OH 45056
United States
(513) 529-3657 (Phone)
(513) 529-6992 (Fax)

Chao Jiang (Contact Author)

University of South Carolina - Department of Finance ( email )

1014 Greene Street
Columbia, SC 29208
United States

Paul D. Koch

Iowa State University - Finance Department

Ivy College of Business
Ames, IA 50011
United States
5152942491 (Phone)

HOME PAGE: http://https://www.business.iastate.edu/directory/pkoch/

Iowa State University - Finance Department

Ames, IA 50011-2063
United States
5152942491 (Phone)

Modupe Babajide Wintoki

University of Kansas - School of Business ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States

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