Insider Trading in Multinational Firms
43 Pages Posted: 3 Aug 2022
Date Written: July 27, 2022
We explore insider trading at multinational firms and find multinational firm insiders make larger trades followed by larger abnormal returns relative to those at domestic firms. Multinational firm insider trading profits are concentrated among top-level insiders (CEO, President and Chairman), and abnormal returns are higher when investor attention is low and when stocks are relatively inexpensive. Further, we find insider trading profits are highest at multinational firms make foreign sales to regions of high cultural and linguistic difference from the United States, suggesting information diffusion plays an important role in the trading differences between insiders at domestic and multinational firms.
Keywords: insider trading; foreign information; limited attention
JEL Classification: G14, F23, G30
Suggested Citation: Suggested Citation