Cross-Border Activities as a Source of Information: Evidence from Insider Trading during the COVID-19 Crisis
Charles A. Dice Working Paper No. 2021-20
58 Pages Posted: 17 Dec 2021 Last revised: 27 Feb 2022
Date Written: December 10, 2021
Insider trading during the early months of the COVID-19 pandemic provides a unique opportunity to study how corporate insiders benefit from information flows in their network of business contacts. I find that insiders at firms with activities in China sell more shares of their companies than other insiders and do so earlier. Consistent with an information channel, I show that firms with supply-chain relationships and subsidiaries in China, more local assets and employees, and insiders overseeing global operations drive these effects. Insiders' private information seems to have been forward-looking, which allowed them to avoid significant losses during the period.
Keywords: Information networks, insider trading, officers and directors, COVID-19
JEL Classification: D83, D85, F23, G14
Suggested Citation: Suggested Citation