CEO and CFO Gender and Firm Wide Insider Trading

Abstract

We investigate insiders’ trading profitability under female executives using a sample of US firms between 1995 and 2016. Our results suggest a significant decrease in firm-wide insider trading profitability following switches from male-to-female CEOs and CFOs. These findings are supported under different empirical specifications, including difference-in-differences on a propensity score matched sample and instrumental variable approach. We also show that male insiders trade more profitably under male top executives than they do after the appointment of a female top executive. These findings suggest that private information flows between male-to-male insider-executive dyads allow for profitable insider trading.