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CEO Social Media Presence and Insider Trading

32 Pages Posted: 23 Aug 2021 Publication Status: Under Review

See all articles by Frank Li

Frank Li

University of Western Ontario - Richard Ivey School of Business

Claire Y.C. Liang

Georgetown University

Zhenyang Tang

Clark University

Abstract

Prior research finds that online social media usage may lower self-control and encourage indulgent behavior in laboratory subjects. We find that corporate CEOs show similar tendencies: CEOs with online social media presence are more likely to succumb to lower self-control and abuse their information advantage to profit from unethical insider trades. Specifically, CEOs’ social media presence strongly predicts their insider trading activity in terms of incidence, intensity (amount and frequency), and profitability. We further find that the effect is driven by insider buys (not by sells) and is more pronounced for opportunistic buys which tend to contain more material non-public information.

Keywords: Insider trading; Social media; CEO misconduct; Business ethics

JEL Classification: G14; G34; M12; M14; G41

Suggested Citation

Li, Frank and Liang, Claire Y.C. and Tang, Zhenyang, CEO Social Media Presence and Insider Trading. Available at SSRN: https://ssrn.com/abstract=3909886 or http://dx.doi.org/10.2139/ssrn.3909886

Frank Li

University of Western Ontario - Richard Ivey School of Business ( email )

1151 Richmond Street North
London, Ontario N6A 3K7
Canada

Claire Y.C. Liang

Georgetown University ( email )

Washington, DC 20057
United States

Zhenyang Tang (Contact Author)

Clark University ( email )

950 Main Street
Worcester, MA 01610
United States

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