Political Connections and Insider Trading
92 Pages Posted: 7 Jun 2019
Date Written: May 13, 2019
Politically connected insiders, especially senior officers who hold a director position, are more likely to make informed trades than non-politically connected insiders. This effect, however, is limited to insider sales, consistent with insider sales facing higher legal risk. Politically connected insiders are also more likely to execute trades that would normally be more likely to trigger an SEC insider trading investigation: trading closer to the earnings announcements, trading during periods that overlap with traditional blackout periods, and missing SEC timely reporting requirements.
Keywords: insider trading; political connections; political contributions
JEL Classification: G14, G18, G28, G38, K22
Suggested Citation: Suggested Citation