Are There Racial Differences in Senior Executives’ Access to Information?

Abstract

We document that African-American executives, on average, earn zero abnormal profits from insider trades, in contrast to Caucasian and Asian-American executives who earn significantly positive abnormal profits, indicating that African-American executives are disadvantaged in access to private corporate information. While differences in industry or insider characteristics cannot explain these racial differences, they are explained by how receptive the firms are to promoting employee equity.

Keywords: African American, Insider trading, Information Access, Race, Taste-based Discrimination

JEL Classification: G14,G30,J16