CEO Social Media Presence and Insider Trading
32 Pages Posted: 23 Aug 2021 Publication Status: Under Review
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
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