Not Just a Boys’ Club: Common Gender and Private Information Channels in Insider Trading

55 Pages Posted: 1 Jul 2020 Last revised: 8 Jul 2020

See all articles by Iain Clacher

Iain Clacher

University of Leeds - Leeds University Business School (LUBS)

Beatriz Garcia Osma

Universidad Carlos III de Madrid - Department of Business Administration

Elvira Scarlat

IE Business School, IE University

Karin Shields

University of London - Birkbeck College

Date Written: June 3, 2020

Abstract

We examine how common gender affects insiders’ trading profitability. Building on the common identity bias literature, we argue that gender influences insiders’ access to and use of firm private information, where insiders benefit from greater information sharing with top executives of their same gender. Using a large sample of US firms between 1995 and 2016, we find higher (lower) insider trading profitability for female (male) insiders in the presence of a female CEO or CFO. Analyses of trading by board members that attend meetings and serve on committees with top executives of the same gender corroborate our results that common gender enables private information sharing. We also find greater clustering of insiders’ trades around the trades made by common-gender top executives. These findings are consistent with flows of private information from CEOs and CFOs to less informed common-gender insiders.

Keywords: Gender, Common Gender, Information Asymmetry, Insider Trading

JEL Classification: G14, G34, J16, M41

Suggested Citation

Clacher, Iain and Garcia Osma, Beatriz and Scarlat, Elvira and Shields, Karin, Not Just a Boys’ Club: Common Gender and Private Information Channels in Insider Trading (June 3, 2020). Available at SSRN: https://ssrn.com/abstract=3617747 or http://dx.doi.org/10.2139/ssrn.3617747

Iain Clacher

University of Leeds - Leeds University Business School (LUBS) ( email )

Leeds LS2 9JT
United Kingdom

Beatriz Garcia Osma

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

Elvira Scarlat (Contact Author)

IE Business School, IE University ( email )

Calle Maria de Molina 12
Madrid, Madrid 28006
Spain

Karin Shields

University of London - Birkbeck College ( email )

Malet Street
London, London WC1
United Kingdom

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