Industry Familiarity and Trading: Evidence from the Personal Portfolios of Industry Insiders
AffiliationUniv Arizona, Eller Coll Management
MetadataShow full item record
PublisherELSEVIER SCIENCE SA
CitationBen-David, I., Birru, J., & Rossi, A. (2018). Industry familiarity and trading: Evidence from the personal portfolios of industry insiders. Journal of Financial Economics.
JournalJOURNAL OF FINANCIAL ECONOMICS
Rights© 2018 Elsevier B.V. All rights reserved.
Collection InformationThis item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at email@example.com.
AbstractWe study whether industry familiarity is an advantage in stock trading by exploring the trading patterns of industry insiders in their own personal portfolios. To do so, we identify accounts of industry insiders in a large data set provided by a retail discount broker. We find that insiders trade firms from their own industry more frequently. Furthermore, they earn abnormal returns exclusively when trading own-industry stocks, especially obscure stocks (small, low analyst coverage, high volatility). In a battery of tests, we find no evidence of the use of private information. The results are most consistent with the interpretation that industry familiarity is an advantage in stock trading. (C) 2018 Elsevier B.V. All rights reserved.
Note24 month embargo; published online: 25 September 2018
VersionFinal accepted manuscript
SponsorsDice Center at the Fisher College of Business