CEO Social Media Presence and Insider Trading Behavior

Abstract

Prior research finds that online social media usage may lower self-control and encourage indulgent behavior. We find that corporate CEOs show similar tendencies: CEOs with online social media presence are more likely to succumb to lower self-control and abuse their information advantage to profit from unethical opportunistic inside trades. Specifically, social media presence strongly predicts the incidence, intensity, and profitability of CEO insider trading activity. Our results only reside in buys (not in sells), especially opportunistic buys which likely contain more material non-public information.

Keywords: social media, insider trading

JEL Classification: G14, M12, G3