Detalle Publicación


Political Connections and the Informativeness of Insider Trades

Autores: Jagolinzer, A. D.; Larcker, D. F.; Ormazabal Sanchez, Gaizka; Taylor, D. J. (Autor de correspondencia)
Título de la revista: JOURNAL OF FINANCE
ISSN: 0022-1082
Volumen: 75
Número: 4
Páginas: 1833 - 1876
Fecha de publicación: 2020
We analyze the trading of corporate insiders at leading financial institutions during the 2007 to 2009 financial crisis. We find strong evidence of a relation between political connections and informed trading during the period in which Troubled Asset Relief Program (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.