Insider Trading and Networked Directors

Luc Renneboog, M. Goergen, Y. Zhao

Research output: Working paperDiscussion paperOther research output

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.
LanguageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages47
Volume2018-036
StatePublished - 11 Sep 2018

Publication series

NameCentER Discussion Paper
Volume2018-036

Fingerprint

Insider trading
Industry
Trading behavior
Peers
Non-executive directors
Private information
Purchase
Listed companies

Keywords

  • insider trading
  • director networks
  • network analysis
  • centrality
  • opoortunistic trading
  • routine trading

Cite this

Renneboog, L., Goergen, M., & Zhao, Y. (2018). Insider Trading and Networked Directors. (CentER Discussion Paper; Vol. 2018-036). Tilburg: CentER, Center for Economic Research.
Renneboog, Luc ; Goergen, M. ; Zhao, Y./ Insider Trading and Networked Directors. Tilburg : CentER, Center for Economic Research, 2018. (CentER Discussion Paper).
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Renneboog, L, Goergen, M & Zhao, Y 2018 'Insider Trading and Networked Directors' CentER Discussion Paper, vol. 2018-036, CentER, Center for Economic Research, Tilburg.

Insider Trading and Networked Directors. / Renneboog, Luc; Goergen, M.; Zhao, Y.

Tilburg : CentER, Center for Economic Research, 2018. (CentER Discussion Paper; Vol. 2018-036).

Research output: Working paperDiscussion paperOther research output

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Renneboog L, Goergen M, Zhao Y. Insider Trading and Networked Directors. Tilburg: CentER, Center for Economic Research. 2018 Sep 11, (CentER Discussion Paper).