Political Connections and Insider Trading

74 Pages Posted: 7 Jun 2019 Last revised: 14 Jul 2020

See all articles by Thuong Harvison

Thuong Harvison

Frostburg State University; University of Arizona, Eller College of Management, Department of Finance

Date Written: May 13, 2019

Abstract

Politically connected insiders are more likely to sell shares prior to negative abnormal returns and engage in other aggressive trading behavior: trading prior and closer to major corporate events, trading during periods that overlap with traditional blackout periods, and missing SEC timely reporting requirements. These findings are consistent with insiders perceiving their political connections as protection against SEC enforcement. The relation between political connections and insider trading is stronger for connections with Senators and with each political party when that party controls both Congressional chambers.

Keywords: insider trading; political connections; political contributions

JEL Classification: G14, G18, G28, G38, K22

Suggested Citation

Harvison, Thuong, Political Connections and Insider Trading (May 13, 2019). Available at SSRN: https://ssrn.com/abstract=3387495 or http://dx.doi.org/10.2139/ssrn.3387495

Thuong Harvison (Contact Author)

Frostburg State University ( email )

Frampton Hall
Frostburg, MD 21532
United States

University of Arizona, Eller College of Management, Department of Finance ( email )

McClelland Hall
P.O. Box 210108
Tuscon, AZ 85721
United States

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