Tax noncompliance and insider trading

Juha-Pekka Kallunki*, Jenni Mikkonen, Henrik Nilsson, Hanna Setterberg

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

4 Citations (Scopus)

Abstract

This paper explores whether insiders who have shown noncompliance with the tax law ('non-compliant insiders') are more prone to exploit their information advantage in insider trading, compared to other insiders ('compliant insiders'). Our empirical results from analyzing archival data of all insider trades in Sweden show that noncompliant insiders use more of their information advantage to trade their insider stocks shortly before significant stock price changes, compared to compliant insiders. These results remain similar after controlling for various insider- and firm-specific determinants of insider returns, including firm and year fixed effects. We believe that our results are of interest for academics and regulatory authorities monitoring and screening insider trading activity. (C) 2015 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)157-173
Number of pages17
JournalJOURNAL OF CORPORATE FINANCE
Volume36
DOIs
Publication statusPublished - Feb 2016
MoE publication typeA1 Journal article-refereed

Keywords

  • Insider trading
  • Tax noncompliance
  • Noncompliant insiders
  • INFORMATION ASYMMETRY
  • EARNINGS
  • TRADES
  • RESTRICTIONS
  • ATTITUDES
  • EVASION
  • IMPACT
  • LAWS

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