Global Economic Impact of COVID-19: Evidence from Insider Trades
41 Pages Posted: 10 Jun 2020
Date Written: May 20, 2020
We examine insider trades around the onset of the COVID-19 pandemic. Insiders purchased shares in record numbers after the stock market decline that began in late February 2020. We find that insider purchases were more pronounced for larger firms, value firms, firms with high levels of leverage as well as firms in the finance, energy and consumer nondurable sectors. These results suggest that insiders believe the impact of COVID-19 on global economic activity and the stock prices of their companies to be temporary. We also find some evidence of opportunistic insider selling in January and February 2020 prior to the stock market decline, suggesting that some insiders anticipated the decline. Finally, we find similar patterns in insider trading in Canada, Italy, Spain and South Korea, but a more muted response in China. Our results indicate that insiders’ private information became especially valuable during this period of significant market disruption.
Keywords: Insider Trading, COVID-19, Coronavirus, Pandemic
JEL Classification: G11, G12, G14, G17
Suggested Citation: Suggested Citation