Flying below the radar: Insider trading by executives below the top

46 Pages Posted: 8 Nov 2021

See all articles by Hans K. Hvide

Hans K. Hvide

University of Bergen - Department of Economics; University of Aberdeen - Business School; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance

Date Written: November 2021

Abstract

To enforce insider trading laws, financial regulators require top executives in listed companies to make their own-company trades public. One implication of this regulatory focus is that many executives below the top fly under the radar. In this study, we use administrative register data from Norway to examine whether executives below the top in listed companies earn abnormal returns on purchases in own-company stock. We show evidence of positive abnormal returns of own-company purchases using several alternative benchmarks, including own-company sells, purchases and sells of stocks of other companies, and purchases prior to joining the company. The estimates are economically large: about 100 basis points on a 1-month horizon. Our findings suggest the need for a debate on whether executives who are currently flying below the radar should be required to disclose their own-company stock trades.

Keywords: insider trading, executives, employees, regulation

JEL Classification: G30, G32, G38

Suggested Citation

Hvide, Hans and Nielsen, Kasper Meisner, Flying below the radar: Insider trading by executives below the top (November 2021). Available at SSRN: https://ssrn.com/abstract=3957199 or http://dx.doi.org/10.2139/ssrn.3957199

Hans Hvide

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

HOME PAGE: http://hans.hvide.googlepages.com/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Kasper Meisner Nielsen (Contact Author)

Copenhagen Business School - Department of Finance ( email )

A4.17 Solbjerg Plads 3
Copenhagen, Frederiksberg 2000
Denmark

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