Network Centrality and Value Relevance of Insider Trading: Evidence from Europe

Financial Review, Forthcoming

41 Pages Posted: 10 Jun 2021 Last revised: 6 Oct 2021

See all articles by Mansoor Afzali

Mansoor Afzali

Hanken School of Economics

Minna Martikainen

University of Vaasa; Hanken School of Economics

Date Written: June 3, 2021


We examine the value relevance of insider trades in Europe and find that both purchases and sales of well-connected insiders are positively associated with long-term abnormal returns. We argue that the market perceives the purchases of networked insiders as more informative, leading to higher returns. For sales of networked insiders, the market decreases their negative information content, leading to lower negative returns. Our results do not support the view that insiders use their informational advantage to extract economic rents in the form of dollar profits. We posit that they use their networks to provide signals to the market when trading.

Keywords: Insider trading, network centrality, trust, value relevance

Suggested Citation

Afzali, Mansoor and Martikainen, Minna, Network Centrality and Value Relevance of Insider Trading: Evidence from Europe (June 3, 2021). Financial Review, Forthcoming, Available at SSRN: or

Mansoor Afzali (Contact Author)

Hanken School of Economics ( email )

FI-00101 Helsinki

Minna Martikainen

University of Vaasa ( email )

P.O. Box 700
Wolffintie 34
FIN-65101 Vaasa, FI-65101
+358504681823 (Phone)

Hanken School of Economics ( email )

PoBox 479
Helsinki, 00100

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