Insider Trading and Geographic Proximity: Evidence from Covid-19

The COVID-19 pandemic has dramatically changed how businesses operate, resulting in unprecedented stock market effects. While the U.S. stock market has historically shown little to no reaction to an infectious disease outbreak, COVID-19 precipitated a global stock market downturn now known as the “stock market crash of 2020” (Baker et al., 2020). The natural inclination of investors and the media is to wonder whether anyone could have seen it coming. We suggest that corporate insiders with geographic proximity to China and the early developments of COVID-19 were more attentive to, and better understood, the potential effects of COVID-19 on their … Read more