Project Title

Does Company Executive Rank Affect the Probability of Committing Insider Trading?

Presentation Author(s) Information

Lauren MoskowitzFollow

Faculty Mentor(s) Name(s)

Dr. Conaway

Abstract

Despite the SEC tightening its rules and regulations, insider trading is growing, which emphasizes the importance of continued research on illegal transactions. The number of court cases for insider trading during the current fiscal year is expected to reach 24 cases in September, with 115 total cases since 2018, including both civil and administrative proceedings (Alpert, 2022). Utilizing data on the rank of the individuals within S&P500 companies, their transactions, and compensation packages, I examine the effect of rank on insider trading. I expect to find a positive relationship between executive rank and insider trading. As seen in previous work, executives will strategically choose the most effective time to execute their trades by selecting the most beneficial executive deferral plan based on their knowledge of future events (Franco, 2018). If individuals with specific executive ranks are more likely to engage in insider trading, the SEC could target a set group of individuals to help reduce insider trading.

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Does Company Executive Rank Affect the Probability of Committing Insider Trading?

Despite the SEC tightening its rules and regulations, insider trading is growing, which emphasizes the importance of continued research on illegal transactions. The number of court cases for insider trading during the current fiscal year is expected to reach 24 cases in September, with 115 total cases since 2018, including both civil and administrative proceedings (Alpert, 2022). Utilizing data on the rank of the individuals within S&P500 companies, their transactions, and compensation packages, I examine the effect of rank on insider trading. I expect to find a positive relationship between executive rank and insider trading. As seen in previous work, executives will strategically choose the most effective time to execute their trades by selecting the most beneficial executive deferral plan based on their knowledge of future events (Franco, 2018). If individuals with specific executive ranks are more likely to engage in insider trading, the SEC could target a set group of individuals to help reduce insider trading.