Abstract
To enforce insider trading laws, financial regulators require top executives in listed companies to make their own-company trades public. One implication of this regulatory focus is that many executives below the top fly under the radar. In this study, we use administrative register data from Norway to examine whether executives below the top in listed companies earn abnormal returns on purchases in own-company stock. We show evidence of positive abnormal returns of own-company purchases using several alternative benchmarks, including own-company sells, purchases and sells of stocks of other companies, and purchases prior to joining the company. The estimates are economically large: about 100 basis points on a 1-month horizon. Our findings suggest the need for a debate on whether executives who are currently flying below the radar should be required to disclose their own-company stock trades.
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