An Insider Trading Cocktail - A Study on Gender Differences and the Implications of the Capital Insurance

Sammanfattning: This research paper analyzes gender differences in abnormal returns earned by insiders and possible implications of the Swedish capital insurance, “kapitalförsäkring”, on insider trading. The sample data includes 288 company listings on the Stockholm Stock Exchange and the studied period is 1998-2010. 17,655 buy transactions and 9,163 sell transactions are analyzed of which 11.3% are carried out by females. The transaction data is analyzed on positions held within the company and on a sector level. We conclude that male insiders earn higher abnormal returns than female insiders on both buy and sell transactions. This can be explained by the information asymmetry between the genders. We also conclude that abnormal returns earned by insiders on buy transactions have decreased in the latter part of the studied period. This could partly be explained by the increased usage of the capital insurance among insiders.