Trading Skill: Evidence from Trades of Corporate Insiders in Their Personal Portfolios

Itzhak Ben-David, Justin Birru and Andrea Rossi
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Justin Birru: Ohio State University
Andrea Rossi: Ohio State University

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: We study trading patterns of corporate insiders in their own personal portfolios. To do so, we identify accounts of corporate insiders in a large dataset provided by a retail discount broker. We show that insiders overweight firms from their own industry. Furthermore, insiders earn substantial abnormal returns only on stocks from their industry, especially obscure stocks (small, low analyst coverage, high volatility). In a battery of tests, we find no evidence that corporate insiders use private information and conclude that insiders have an informational advantage in trading stocks from their own industry over outsiders to the industry.

JEL-codes: G11 G14 (search for similar items in EconPapers)
Date: 2016-03
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2016-08

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