Keywords: Insider Trading, Newspaper, Information Asymmetry
JEL Codes: G14, G30, L82
학회소식
[2022년 5차 CAFM2022]Insider Trading in News Deserts
작성자 : 관리자
조회수 : 1676
게시일 :
2022-12-20
This study examines the informational value of local news outlets and how it affects insider trading. We hypothesize that local news coverage is a critical channel through which outsiders acquire local information, which restricts insiders’ ability to profit from information. A shortage of local news would increase information opacity faced by outsiders while making it easier for insiders to seize profitable trading opportunities. Exploring the staggered shutdown of local newspapers, our difference-in-differences estimation presents novel evidence that after local newspaper closures, insiders from the closure county trade more profitably than do those from a non-closure county, particularly in small firms that lack alternative news sources. Further analyses reaffirm that the post-closure increase in trading profits is unlikely to be wholly driven by regional economic conditions but likely driven by increased information costs. Our results highlight that local newspapers play a significant role in mitigating information asymmetry between insiders and outsiders.
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