Cross-Insider Trading

The Business Financing and Banking Research Group invite you to lunch and learn seminar presented by Professor Thorsten Hens.

Abstract

In this paper, we argue that insiders could access and even exchange nonpublic material in-formation through professional networks and conduct cross-stock trading to exploit it, which we term “cross-insider trading”. We use two novel datasets—a proprietary administrative transaction-level data from India and LinkedIn profiles–and provide strong evidence consistent with this argument. Specifically, we find that insiders trade more frequently on stocks where their former colleagues currently work, and such trading is not due to industry/local familiarity. We also find that these cross-insider trading can significantly predict future stock returns without reversal, whereas the trades of the same group of insiders have no such pre dictability on stocks in the same industry. More importantly, we use exogenous “moving-out” of linked insiders as quasi-exogenous shocks to address causality issues. Cross-insider trading constitutes a distinct form of insider trading and challenges the current regulatory framework.

Presented by

Shiyang Huang - HKU Business School - Dr. Shiyang HUANG received his Ph.D. degree in finance from the London School of Economics in 2015.  He also holds a master degree and a bachelor degree in economics from Tsinghua University.  He joined The University of Hong Kong in 2015.

Shiyang’s research agenda focuses on financial economics and empirical asset pricing.  He has published research papers in several academic journals including Journal of Financial Economics, Management Science and Journal of Economic Theory.  He also won the best paper awards at academic conferences, including Best Paper Award at 7th Melbourne Asset Pricing Meeting, Conference Best Paper Award at China International Conference in Finance of 2019, Best Paper Award at 14th Annual Conference in Financial Economics Research by Eagle Labs (IDC) of 2017, Yihong Xia Best Paper Award at hina International Conference in Finance of 2015, Conference Best Paper Award at Paris December Finance Meeting of 2014, IdR  QUANTVALLEY / FdR Quantitative Management Initiative Research Award of 2013.