CEO Marital Status and Insider Trading

We investigate the association between chief executive officers’ (CEOs’) marital status and their tendency to profit from insider trading. We argue that marriage can constrain CEOs’ opportunistic behaviour, which could increase litigation risk, and show that married CEOs earn lower insider trading r...

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Bibliographic Details
Published in:British journal of management 2023-10, Vol.34 (4), p.1974-1991
Main Authors: Hegde, Prasad, Liao, Shushu, Ma, Rui, Nguyen, Nhut H
Format: Article
Language:English
Subjects:
Asymmetric information
Chief executives
Corporate governance
Insider trading
Litigation
Marital status
Marriage
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Summary:We investigate the association between chief executive officers’ (CEOs’) marital status and their tendency to profit from insider trading. We argue that marriage can constrain CEOs’ opportunistic behaviour, which could increase litigation risk, and show that married CEOs earn lower insider trading returns compared to unmarried CEOs. Insider trades can be identified as either routine or opportunistic. We also find that married CEOs are less likely to engage in opportunistic trades, and they earn lower insider trading returns in firms with weaker corporate governance and higher information asymmetry. Our empirical results remain robust after accounting for several endogeneity tests.
ISSN:1467-8551
1045-3172
1467-8551
DOI:10.1111/1467-8551.12673