Abstract
ABSTRACT We examine the impact of managerial ability on insider trading profitability within geographically diversified firms, where operational complexity can potentially increase insider advantages. We analyse a sample of 54,899 insider purchase transactions and find that higher managerial ability significantly reduces the positive relationship between geographical diversification and insider trading profitability. Our mechanism tests suggest that managers with higher abilities make better information disclosure and collaborate with more capable boards, to reduce insider trading profitability. Our findings suggest that capable managers prioritize enhancing transparency and aligning interests with shareholders above personal financial gains, reducing opportunistic insider trading within geographically diverse firms.
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