What Do Bankers Know?

52 Pages Posted: 26 Dec 2012 Last revised: 19 Apr 2023

See all articles by Renee B. Adams

Renee B. Adams

University of Oxford

Yanhui Wu

Queensland University of Technology - School of Economics and Finance; Financial Research Network (FIRN)

Qiaoqiao Zhu

Australian National University (ANU) - College of Business and Economics; Financial Research Network (FIRN)

Date Written: December 26, 2012

Abstract

Are banks opaque even to insiders? We use legal insider trades of bankers to measure how much they know. Between 2003 and 2018, bank insider purchases conveyed less good news to the market than insider purchases in other industries. To identify the mechanism underlying these results, we exploit variation in approvals of Capital Purchase Program applications and changes in insider roles. Opacity seems to stem from the banks, not the regulatory environment or the ability of bankers. Our results suggest banks are difficult to understand—even for insiders. This has broader implications for governance models.

Keywords: Banks, Insider trading, Information, Governance

JEL Classification: G21, G14

Suggested Citation

Adams, Renée B. and Wu, Yanhui and Zhu, Qiaoqiao, What Do Bankers Know? (December 26, 2012). FIRN Research Paper, ECGI - Finance Working Paper, Available at SSRN: https://ssrn.com/abstract=2193986 or http://dx.doi.org/10.2139/ssrn.2193986

Renée B. Adams (Contact Author)

University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Yanhui Wu

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Qiaoqiao Zhu

Australian National University (ANU) - College of Business and Economics ( email )

Canberra, Australian Capital Territory 2601
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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