Short-horizon insiders and stock trades in personal portfolios
Diem Nguyen  1@  , Taylan Mavruk  2@  , Shahin Sarwar  2  
1 : Lund University, School of Economics and Management  (LUSEM)
220 07 LUND -  Sweden
2 : University of Gothenburg

We examine the effect of insider investment horizon on their personal portfolio choices. We observe significantly higher trading activity for short-horizon CEOs compared to those with a longer investment horizon. Short-horizon insiders trade more in own-firm stocks than long-horizon insiders do. Short-horizon insiders also trade more in own-firm stock than their expertise stocks, defined based on industry familiarity and local stocks. The trades of short-horizon insiders consistently outperform the trades of long-horizon insiders in both own-firm trades and expertise trades. These results are mainly driven by insiders' purchases rather than their sales. Overall, our findings suggest that short-horizon insiders' trades are more informative compared to that of long-horizon insiders.


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