Retail Investor Attention and Insider Trading

62 Pages Posted: 22 Apr 2021

See all articles by Sattar Mansi

Sattar Mansi

Virginia Polytechnic Institute & State University

Lin Peng

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance

Jianping Qi

University of South Florida - College of Business Administration

Han Shi

Louisiana State University, Shreveport

Date Written: April 21, 2021

Abstract

We document a strong link between retail investor attention and opportunistic insider trading. An increase (decrease) in retail attention on a stock is associated with significantly more insider selling (buying). Compared to other types of insider trades, trades that are associated with investor attention generate substantially higher returns. Attention-related insider sales are also associated with a lower risk of SEC investigation and tend to increase following news releases regarding SEC enforcement actions. The results are stronger for lottery stocks, for nonindependent insider directors, and for firms that exhibit weaker governance and poorer social responsibility.

Keywords: Investor Attention; Google SVI; Insider Trading; Governance; SEC Enforcement Actions

JEL Classification: G02, G12, G14

Suggested Citation

Mansi, Sattar and Peng, Lin and Qi, Jianping and Shi, Han, Retail Investor Attention and Insider Trading (April 21, 2021). Available at SSRN: https://ssrn.com/abstract=3831504 or http://dx.doi.org/10.2139/ssrn.3831504

Sattar Mansi

Virginia Polytechnic Institute & State University ( email )

Lin Peng (Contact Author)

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance ( email )

17 Lexington Avenue
New York, NY 10010
United States

Jianping Qi

University of South Florida - College of Business Administration ( email )

USF College of Business
4202 E. Fowler Avenue, BSN 3403
Tampa, FL 33620-5500
United States
813-974-9856 (Phone)
813-974-3084 (Fax)

Han Shi

Louisiana State University, Shreveport ( email )

Shreveport, LA
United States

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