EconPapers    
Economics at your fingertips  
 

Industry familiarity and trading: Evidence from the personal portfolios of industry insiders

Itzhak Ben-David, Justin Birru and Andrea Rossi

Journal of Financial Economics, 2019, vol. 132, issue 1, 49-75

Abstract: We study whether industry familiarity is an advantage in stock trading by exploring the trading patterns of industry insiders in their own personal portfolios. To do so, we identify accounts of industry insiders in a large data set provided by a retail discount broker. We find that insiders trade firms from their own industry more frequently. Furthermore, they earn abnormal returns exclusively when trading own-industry stocks, especially obscure stocks (small, low analyst coverage, high volatility). In a battery of tests, we find no evidence of the use of private information. The results are most consistent with the interpretation that industry familiarity is an advantage in stock trading.

Keywords: Retail trading; Insiders; Officers and directors; Investor experience (search for similar items in EconPapers)
JEL-codes: G11 G14 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304405X18302289
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Industry Familiarity and Trading: Evidence from the Personal Portfolios of Industry Insiders (2016) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:132:y:2019:i:1:p:49-75

Access Statistics for this article

Journal of Financial Economics is currently edited by G. William Schwert

More articles in Journal of Financial Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2020-01-05
Handle: RePEc:eee:jfinec:v:132:y:2019:i:1:p:49-75