University of Oulu

Kallunki, J.-P., Mikkonen, J., Nilsson, H., & Setterberg, H. (2016). Tax noncompliance and insider trading. Journal of Corporate Finance, 36, 157–173.

Tax noncompliance and insider trading

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Author: Kallunki, Juha-Pekka1; Mikkonen, Jenni2; Nilsson, Henrik3;
Organizations: 1University of Oulu, Stockholm School of Economics, Aalto University School of Business
2Department of Accounting, University of Oulu, P.O. Box 4600, FIN-90014, Finland
3Department of Accounting, Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Format: article
Version: accepted version
Access: open
Online Access: PDF Full Text (PDF, 0.5 MB)
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Language: English
Published: Elsevier, 2016
Publish Date: 2021-08-26


This paper explores whether insiders who have shown noncompliance with the tax law (‘noncompliant insiders’) are more prone to exploit their information advantage in insider trading, compared to other insiders (‘compliant insiders’). Our empirical results from analyzing archival data of all insider trades in Sweden show that noncompliant insiders use more of their information advantage to trade their insider stocks shortly before significant stock price changes, compared to compliant insiders. These results remain similar after controlling for various insider- and firm-specific determinants of insider returns, including firm and year fixed effects. We believe that our results are of interest for academics and regulatory authorities monitoring and screening insider trading activity.

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Series: Journal of corporate finance
ISSN: 0929-1199
ISSN-E: 1872-6313
ISSN-L: 0929-1199
Volume: 36
Pages: 157 - 173
DOI: 10.1016/j.jcorpfin.2015.12.005
Type of Publication: A1 Journal article – refereed
Field of Science: 512 Business and management
Funding: The authors gratefully acknowledge financial support from the NASDAQ OMX Nordic Foundation, Vetenskapsrådet, the Handelsbanken Research Foundation, the Finnish Savings Banks Group Research Foundation, the Marcus Wallenberg Research Foundation, the Finnish Cultural Foundation, and the Academy of Finland [Project # 243017121].
Copyright information: © 2015 Elsevier B.V. This manuscript version is made available under the CC-BY-NC-ND 4.0 license