Finance

Business

Politics

Political science

Economics

Relation (database)

Insider

Computer science

Monetary economics

Insider trading

Financial system

Computer security

Asset (computer security)

Database

The Journal of Finance

ABSTRACT We analyze the trading of corporate insiders at leading financial institutions during the 2007 to 2009 financial crisis. We find strong evidence of a relation between political connections and informed trading during the period in which Troubled Asset Relief Program (TARP) funds were disbursed, and that the relation is most pronounced among corporate insiders with recent direct connections. Notably, we find evidence of abnormal trading by politically connected insiders 30 days in advance of TARP infusions, and that these trades anticipate the market reaction to the infusion. Our results suggest that political connections can facilitate opportunistic behavior by corporate insiders.

Political Connections and the Informativeness of Insider Trades