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Industry Familiarity and Trading: Evidence from the Personal Portfolios of Industry Insiders / Itzhak Ben-David, Justin Birru, Andrea Rossi.
- Format:
- Book
- Author/Creator:
- Ben-David, Itzhak.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w22115.
- NBER working paper series no. w22115
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Industry Familiarity and Trading
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2016.
- Summary:
- We study whether industry familiarity is an advantage in stock trading by exploring the trading patterns of industry insiders in their own personal portfolios. To do so, we identify accounts of industry insiders in a large dataset provided by a retail discount broker. We find that insiders trade firms from their own industry more frequently. Furthermore, they earn abnormal returns exclusively when trading own-industry stocks, especially obscure stocks (small, low analyst coverage, high volatility). In a battery of tests, we find no evidence of the use of private information. The results are most consistent with the interpretation that industry familiarity is an advantage in stock trading.
- Notes:
- Print version record
- March 2016.
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