Political connections and the informativeness of insider trades
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Authors
Jagolinzer, Alan
Larcker, DF
Ormazabal, G
Taylor, DJ
Publication Date
2020-08Journal Title
The Journal of Finance
ISSN
0022-1082
Publisher
Wiley-Blackwell
Volume
75
Issue
4
Pages
1833-1876
Type
Article
This Version
AM
Metadata
Show full item recordCitation
Jagolinzer, A., Larcker, D., Ormazabal, G., & Taylor, D. (2020). Political connections and the informativeness of insider trades. The Journal of Finance, 75 (4), 1833-1876. https://doi.org/10.1111/jofi.12899
Abstract
We analyze the trading of corporate insiders at leading financial institutions during the Financial Crisis. We find strong evidence of a relation between political connections and informed trading during the period in which TARP funds were disbursed, and that the relation is most pronounced among corporate insiders with recent direct connections. Notably, we find evidence of abnormal trading by politically connected insiders 30 days in advance of TARP infusions, and that these trades anticipate the market reaction to the infusion. Our results suggest that political connections can facilitate opportunistic behavior by corporate insiders.
Embargo Lift Date
2022-03-20
Identifiers
External DOI: https://doi.org/10.1111/jofi.12899
This record's URL: https://www.repository.cam.ac.uk/handle/1810/299302
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All rights reserved