Social media, investor-company interaction and insider trading profitability: Evidence from China

Nan Xie, Qifa Xu, Cuixia Jiang and Hong Fu

Research in International Business and Finance, 2023, vol. 66, issue C

Abstract: The emergence of social media enables minority shareholders to participate in corporate governance by making their voice heard. This study examines the effect of social media interaction between minority shareholders and companies on insider trading profitability. Using the “Easy interaction” platform in China, we find robust evidence that social media interaction significantly reduces the profitability of insider trades. This negative effect is stronger for firms with higher management shareholdings, poorer information environment, and less government involvement. Overall, our findings indicate that social media can play a role in corporate governance by restricting the profits of opportunistic insider trading activities.

Keywords: Social media interaction; Insider trading profitability; Management shareholdings; Information environment; Government involvement (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:66:y:2023:i:c:s0275531923001599

DOI: 10.1016/j.ribaf.2023.102033

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