Abstract
We examine the profitability of stock trades executed by Securities and Exchange Commission (SEC) employees. Subject to the considerable constraints of the data (no portfolio information, occupational details, or individual identifiers and an inability to determine profitability of trades), we find that a hedge portfolio mimicking such trades earns a positive abnormal return of about 8.5 percent per year in US stocks, driven primarily by negative abnormal future returns on sell transactions. The SEC claims that this result stems in part from employees being forced to sell stocks in a firm when they are assigned to secret investigations. We question whether this policy is reasonable.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 441-477 |
| Number of pages | 37 |
| Journal | Journal of Law and Economics |
| Volume | 60 |
| Issue number | 3 |
| DOIs | |
| State | Published - Aug 1 2017 |
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ASJC Scopus subject areas
- Economics and Econometrics
- Law
Cite this
Stock trades of securities and exchange commission employees. / Rajgopal, Shivaram; White, Roger.
In: Journal of Law and Economics, Vol. 60, No. 3, 01.08.2017, p. 441-477.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Stock trades of securities and exchange commission employees
AU - Rajgopal, Shivaram
AU - White, Roger
PY - 2017/8/1
Y1 - 2017/8/1
N2 - We examine the profitability of stock trades executed by Securities and Exchange Commission (SEC) employees. Subject to the considerable constraints of the data (no portfolio information, occupational details, or individual identifiers and an inability to determine profitability of trades), we find that a hedge portfolio mimicking such trades earns a positive abnormal return of about 8.5 percent per year in US stocks, driven primarily by negative abnormal future returns on sell transactions. The SEC claims that this result stems in part from employees being forced to sell stocks in a firm when they are assigned to secret investigations. We question whether this policy is reasonable.
AB - We examine the profitability of stock trades executed by Securities and Exchange Commission (SEC) employees. Subject to the considerable constraints of the data (no portfolio information, occupational details, or individual identifiers and an inability to determine profitability of trades), we find that a hedge portfolio mimicking such trades earns a positive abnormal return of about 8.5 percent per year in US stocks, driven primarily by negative abnormal future returns on sell transactions. The SEC claims that this result stems in part from employees being forced to sell stocks in a firm when they are assigned to secret investigations. We question whether this policy is reasonable.
UR - http://www.scopus.com/inward/record.url?scp=85042501172&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85042501172&partnerID=8YFLogxK
U2 - 10.1086/695691
DO - 10.1086/695691
M3 - Article
AN - SCOPUS:85042501172
VL - 60
SP - 441
EP - 477
JO - Journal of Law and Economics
JF - Journal of Law and Economics
SN - 0022-2186
IS - 3
ER -