University of Oulu

Eugster, F, Kallunki, J, Nilsson, H, Setterberg, H. IQ and corporate insiders’ decisions to time insider and outsider trading. Eur Financ Manag, 2021; 27: 814– 840.

IQ and corporate insiders’ decisions to time insider and outsider trading

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Author: Eugster, Florian1; Kallunki, Jenni2; Nilsson, Henrik3;
Organizations: 1Department of Accounting, Mistra Center for Sustainable Markets, Stockholm School of Economics, Stockholm, Sweden
2Department of Economics, Accounting and Finance, University of Oulu, Oulu, Finland
3Department of Accounting, Stockholm School of Economics, Stockholm, Sweden
Format: article
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 1.2 MB)
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Language: English
Published: John Wiley & Sons, 2021
Publish Date: 2021-12-08


We examine how corporate insiders’ cognitive ability (IQ) affects their decisions to time insider and outsider trading before abnormal stock price changes. Our analysis of archival data on male corporate insiders in Sweden shows they are less prone to time their insider selling and to sell in larger amounts, before abnormal stock price declines as IQ increases. We also find that insiders with a higher IQ are better at timing their outsider buying. Taken together, our results show that corporate insiders’ IQ affects their trading decisions differently, depending on whether they are trading in their insider or outsider stocks.

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Series: European financial management
ISSN: 1354-7798
ISSN-E: 1468-036X
ISSN-L: 1354-7798
Volume: 27
Issue: 5
Pages: 814 - 840
DOI: 10.1111/eufm.12302
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, the OP Group Foundation, the Swedish Handelsbanken Research Foundation (Jan Wallander stipendium W2014-0492:1) and the Swedish Research Council.
Copyright information: © 2021 The Authors. European Financial Management published by John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.