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Political network and muted insider trading
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DOI：10.1016/j.jcorpfin.2026.103007.png)
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Abstract
En 中文
This paper examines how political networks influence insider trading in China. Using biographical data to construct chairman–politician social networks, we find that firms with stronger political networks engage in significantly less insider trading. The effect is stronger for non-state-owned enterprises (non-SOEs) and for long-standing or high-ranking connections. The muted trading persists during periods when insiders possess valuable private information, including prior to M&A announcements and major policy events. The evidence suggests that personal political networks function as informal governance mechanisms that discipline managerial opportunism when formal governance through state ownership is absent.
Keywords:
political network
insider trading
corporate governance
non-state-owned enterprises
managerial opportunism
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