Corporate Insider Trading and Abnormal Returns Across Sectors

Sammanfattning

Corporate insider trading has for a long time been associated with abnormal stock returns, raising questions about market efficiency and informational asymmetry. Previous research has established that insider transactions contain information that makes the market react, but less attention has been put on if the profitability of insider trading differs between sectors within a market. This study examines abnormal returns following insider transactions for firms on Nasdaq Stockholm in 2025, specifically to see if there are differences between sectors and different sized companies.Using an event study methodology, cumulative abnormal returns(CARs) are calculated for periods after insider purchases and sales. Then OLS regressions are used to analyse how CAR’s differ between sectors and market cap categories.The results show that insider purchases are associated with positive abnormal returns, while insider sales are connected to negative abnormal returns. There do exist significant differences between sectors, with Healthcare and Real Estate sectors showing the largest abnormal returns. Smaller firms are shown to have larger positive CAR’s than mid and large sized companies, which is consistent with previous research.