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Do insiders profit from public environmental information? Evidence from insider trading

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  • El Ghoul, Sadok
  • Fu, Zhengwei
  • Guedhami, Omrane
  • Kim, Yongwon

Abstract

We examine whether environmental costs impact the profitability of insider trading. We use a sample of 3189 purchase transactions and 10,200 sales transactions from 31 countries over 2011–2018. We uncover evidence that insiders sell their stocks profitably based on public environmental cost information. Further analysis indicates that these results become more pronounced in contexts of high investor inattention to environmental information, as measured by lower Google search frequencies for environmental information and the presence of right-leaning governments. Our findings demonstrate that insiders can benefit from publicly available environmental information and suggest that investor inattention to this information is a key driver of insider trading performance.

Suggested Citation

  • El Ghoul, Sadok & Fu, Zhengwei & Guedhami, Omrane & Kim, Yongwon, 2024. "Do insiders profit from public environmental information? Evidence from insider trading," Global Finance Journal, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:glofin:v:60:y:2024:i:c:s1044028324000097
    DOI: 10.1016/j.gfj.2024.100937
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    More about this item

    Keywords

    Environmental costs; Insider trading; Investor inattention; Political ideology;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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