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Insider Trading and Networked Directors

Luc Renneboog (), Marc Goergen and Y. Zhao

No 2018-036, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: We analyze the relation between insider trading and the networks of executive and non-executive directors in UK listed companies. While most existing studies focus on firm-specific private information, we find that non-firm-specific information - such as information on other companies and information on industry and market trends - plays an important role in insider trading behavior and performance. Well-connected directors trade shares less frequently and for smaller values. However, their transactions are more profitable, especially when they make consecutive opportunistic purchases in multiple companies on whose boards they sit. Taken together, well-connected directors are likely to outperform their peers with inferior networks.

Keywords: insider trading; director networks; network analysis; centrality; opoortunistic trading; routine trading (search for similar items in EconPapers)
JEL-codes: G14 G34 G39 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-cfn
Date: 2018
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