Insider Trading in Family Firms: Impact of Family Ties and Management Involvement

52 Pages Posted: 24 Jul 2021

See all articles by Stefan Morkoetter

Stefan Morkoetter

University of St. Gallen - School of Finance; University of St.Gallen / St.Gallen Institute of Management in Asia

Tobias Schori

University of St. Gallen

Thomas Zellweger

University of St. Gallen - Center for Family Business; Babson College - Arthur M. Blank Center for Entrepreneurship

Date Written: July 21, 2021

Abstract

We study corporate insider trading and information leakages within family firms. We find that the prof-itability of insider purchases of family insiders is higher compared to those of nonfamily insiders. In contrast, the profitability of insider sales of family insiders is lower compared to those of nonfamily insiders, indicating that family members time their insider trades well when buying shares, but not when selling shares. Furthermore, family insiders without management involvement time their insider sales significantly better, compared to family insiders who are involved in the firm management. Regarding information leakage, abnormal short-selling volumes prior to insider sales are higher when shares are sold by family insiders without management involvement, compared to family insiders who are in-volved in management.

Keywords: Insider trading, information leakage, family firms

JEL Classification: G14, G30

Suggested Citation

Morkoetter, Stefan and Schori, Tobias and Zellweger, Thomas, Insider Trading in Family Firms: Impact of Family Ties and Management Involvement (July 21, 2021). Available at SSRN: https://ssrn.com/abstract=3890992 or http://dx.doi.org/10.2139/ssrn.3890992

Stefan Morkoetter (Contact Author)

University of St. Gallen - School of Finance ( email )

111 Amoy Street
Singapore, 069931
Singapore

University of St.Gallen / St.Gallen Institute of Management in Asia ( email )

111 Amoy Street
Singapore, 069931
Singapore

Tobias Schori

University of St. Gallen ( email )

Bodanstrasse 8
SIAW-HSG
St.Gallen, 9000
Switzerland

Thomas Zellweger

University of St. Gallen - Center for Family Business ( email )

Varnbuelstr. 14
Saint Gallen, St. Gallen CH-9000
Switzerland
+41 71 224 71 42 (Phone)
+41 71 224 71 01 (Fax)

HOME PAGE: http://www.kmu.unisg.ch/org/kmu/web.nsf/wwwPubPersonGer/90349757A26ABCBFC125716B0046D6EE

Babson College - Arthur M. Blank Center for Entrepreneurship

231 Forest Street
Babson Park, MA 02457-0310
United States

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