Insider Filing Violations and Illegal Information Delay

Abstract

We document that a significant number of insiders violate the Securities and Exchange Commission (SEC)reporting requirements by filing open market transactions after the legally required deadline. Prior to Sarbanes-Oxley (SOX), 29% of transactions fell outside the required reporting window. Following SOX, 8% are delinquent. Violations cluster in periods of high information asymmetry, incentivizing insiders to keep trades private, and earn abnormal returns. Collectively, these findings suggest a subgroup of insiders personally benefit from violating SEC disclosure requirements. Evidence also suggests blockholders provide governance for violations. Guilty insiders experience a reduction in board seats and an increased likelihood of turnover.

Keywords: Insider Trading, SEC Regulation, Filing Violations, Information Asymmetry

JEL Classification: G14, G30, G38, K42