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
Date Written: June 3, 2020
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: Suggested Citation