Thesis defence in the University of Oulu

Doctoral Candidate

M.Sc. (Economics and Business Administration) Jenni Kallunki

Faculty and research unit

University of Oulu Graduate School, Oulu Business School, Department of Economics, Accounting and Finance

Field of study


Date and time of the thesis defence

19.6.2019 12:00

Place of the thesis defence

University of Oulu, Arina auditorium (TA105)

Topic of the dissertation

Corporate insiders' personal characteristics and insider trading


Professor Eva Liljeblom, Hanken School of Economics


Professor Petri Sahlström, Oulu Business School

Corporate insiders' personal characteristics and insider trading

Insider trading refers to the reported stock transactions of corporate insiders, that is, the officers, directors, and large shareholders of a firm. This dissertation examines how corporate insiders’ personal characteristics affect their decisions to exploit private information in insider trading.

The first essay of the dissertation examines whether insiders who have shown noncompliance with the tax law are more prone to exploit their information advantage in insider trading than other insiders. Our empirical results from analyzing archival data of all insider trades in Sweden show that the noncompliant insiders use more of their information advantage to trade their insider stocks shortly before significant stock price changes than other insiders.

The second essay explores why insiders engage in informed insider trading, given the surprisingly small average insider returns reported in the literature and the potential costs involved. Using archival data of corporate insiders in Sweden, we show that less wealthy insiders are more likely to time their insider selling, and sell in greater magnitudes, prior to abnormal price declines than wealthy insiders. We also find that less-wealthy insiders with lower risk-aversion as measured by their criminal behavior are particularly prone to timing their selling to avoid price declines.

The third essay examines what type of insiders are willing to violate their own company’s restrictions on insider trading by trading on their private information during blackout periods when the firm prohibits trading by its insiders. Using archival data of corporate insiders in Finland, I find that less-wealthy insiders avoid economically significant insider losses by selling their insider stocks during the prohibited blackout period. These insider sales also predict negative earnings surprises.

Last updated: 7.6.2019