Retail Investors' Attention and Insider Trading

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dc.contributor.authorMansi, Sattar A.en
dc.contributor.authorPeng, Linen
dc.contributor.authorQi, Jianpingen
dc.contributor.authorShi, Hanen
dc.date.accessioned2019-01-08T15:11:20Zen
dc.date.available2019-01-08T15:11:20Zen
dc.date.issued2019-01-07en
dc.date.updated2019-01-08T15:11:19Zen
dc.description.abstractWe document a significant increase in opportunistic insider trades when retail investors are paying greater attention to the stock. Using Google SVI to proxy for their level of attention, we find that a higher (lower) SVI on a stock is associated with more insider sales (purchases) of the stock and greater abnormal returns on the sales (purchases). A value-weighted long-short portfolio mimicking insider trades would earn an abnormal return of 1.19% per month (14.28% per year), excluding transaction costs. We also find that the SVI-related insider traders tend to be non-independent directors who have long tenures but no senior executive positions in their firm and the firm tends to exhibit weaker governance, lower reputation, and poorer social responsibility. Our results are stronger for lottery-type stocks but are weaker for stocks with large attention of local investors. Interestingly, the risk of SEC investigation and litigation is lower on SVI-related insider sales and this type of sales actually rises following an increase in news releases of SEC enforcement action. Our results are robust to various identification tests. Overall, certain insiders appear to engage in trades to take advantage of variations of retail investors’ attention to their stock.en
dc.description.notesWorking paperen
dc.format.mimetypeapplication/pdfen
dc.identifier.orcidMansi, Sattar [0000-0001-7098-7996]en
dc.identifier.urihttp://hdl.handle.net/10919/86633en
dc.language.isoenen
dc.rightsIn Copyrighten
dc.rights.urihttp://rightsstatements.org/vocab/InC/1.0/en
dc.titleRetail Investors' Attention and Insider Tradingen
dc.typeArticleen
dc.type.dcmitypeTexten
pubs.organisational-group/Virginia Tech/Pamplin College of Businessen
pubs.organisational-group/Virginia Techen
pubs.organisational-group/Virginia Tech/All T&R Facultyen
pubs.organisational-group/Virginia Tech/Pamplin College of Business/Finance, Insurance, and Business Lawen
pubs.organisational-group/Virginia Tech/Pamplin College of Business/PCOB T&R Facultyen

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