Delinquent Insider Trade Reporting and Corporate Misconduct

51 Pages Posted: 3 Jan 2024

See all articles by Brandon N. Cline

Brandon N. Cline

Mississippi State University

Caleb Houston

University of Alabama at Birmingham

Junnatun Naym

Mississippi State University

Multiple version iconThere are 2 versions of this paper

Date Written: September 29, 2024

Abstract

Delinquent insider trade reporting is a violation of securities law. Although these violations may seem minor, they indicate a broader culture of firm noncompliance, which can lead to other forms of misconduct. Using a panel dataset of 18,567 firm-year observations, we find a significant positive relation association between insider filing violations and future corporate misconduct. This effect is strongest for firms with a weak internal oversight system, proxied by firms that do not have a Chief Compliance Officer (CCO) or a voluntary restriction on blackout trading. These findings suggest that implementing a strong internal regulatory system fosters a culture of compliance and establishes checks and balances within the firm.

Keywords: Insider Trading Filing Violations, Corporate Misconduct, Corporate Culture, Governance

Suggested Citation

Cline, Brandon N. and Houston, Caleb and Naym, Junnatun, Delinquent Insider Trade Reporting and Corporate Misconduct (September 29, 2024). Available at SSRN: https://ssrn.com/abstract=4682855 or http://dx.doi.org/10.2139/ssrn.4682855

Brandon N. Cline (Contact Author)

Mississippi State University ( email )

Mississippi State, MS 39762
United States
662.325.7477 (Phone)
662.325.1977 (Fax)

Caleb Houston

University of Alabama at Birmingham ( email )

Birmingham, AL 35294-4460
United States

Junnatun Naym

Mississippi State University ( email )

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