Network centrality, connections, and social capital: Evidence from CEO insider trading gains

Author First name, Last name, Institution

Rwan El‐Khatib, Zayed University
Dobrina Jandik, University of Arkansas
Tomas Jandik, University of Arkansas

Document Type

Article

Source of Publication

Financial Review

Publication Date

2-1-2021

Abstract

Chief executive officer's (CEO's) insider trading gains are affected by the position of the CEO within the hierarchy of all executives, as assessed by network centrality. CEOs with high centrality earn superior abnormal returns following their company's stock purchases, consistent with social capital advantage. Social capital and trading gains are positively associated primarily in firms that are riskier, have weak governance, or are managed by CEOs with no background in finance. High‐centrality CEOs also gain by selling their shares prior to a bad news event experienced by their firm. Finally, trading gains are positively affected by CEOs having past connections to the chief financial officers.

DOI Link

10.1111/fire.12260

ISSN

0732-8516

Publisher

Wiley-Blackwell

Disciplines

Business

Keywords

insider trading, network centrality, social capital, social networks

Scopus ID

85100292939

Recommended Citation

El‐Khatib, Rwan; Jandik, Dobrina; and Jandik, Tomas, "Network centrality, connections, and social capital: Evidence from CEO insider trading gains" (2021). All Works. 2486.
https://zuscholars.zu.ac.ae/works/2486

Indexed in Scopus

yes

Open Access

no