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Previous literature suggests various motives and factors affecting insider trading, but little systematic empirical evidence exists on how they affect insider trading decisions jointly. The purpose of this paper is to address this issue.

This study adopts a multivariate fix‐effect framework to jointly examine the factors affecting insider trading decisions using a sample of directors serving multiple companies. The timing of the trading is taken as given and an examination made as to why a specific stock was traded among all the insider stocks the director holds. The observations of the untraded stocks supplement the direct observation of the traded stocks, and allow the issue of insider trading motives to be tested in a multivariate framework with director fix‐effect.

Evidence is found for the joint presence of the following motives in determining directors' trading choices: information; insider preferences for small value companies with significant previous price movement; the avoidance of information sensitive period; and corporate‐level insider trading restrictions. It is empirically shown that director trading motives vary by transaction size.

This paper provides systematic empirical evidence on the factors affecting the trading decisions of US directors.

The purpose of this chapter is to establish whether director trades provide information to investors about the future prospects of the company they form part of and thus reduce the information asymmetry beyond what is already conveyed in the financial statements.

Director Dealings were dealt with as an investment strategy by looking at past transactions of directors executed between January 2005 and December 2014 on the Malta Stock Exchange (MSE) and evaluating whether there was an increase in returns for investors who copy director trades. The study focused on whether short-term abnormal returns for up to 12 months after the transaction date, being either a buy or a sale, were made by directors in Malta when trading in their own companies.

The results show that in the short-term period of up to 12 months after the transaction date, Maltese directors do transmit information to the market both when they purchase shares in their own companies and also when they sell shares. The interesting fact about the study is that in Malta sale transactions are more valuable to the outsiders than purchase transactions. Apart from this, the results also show that some companies which are listed on the MSE are more indicative as to their future performance than others. It was ultimately concluded that even though there are informational asymmetries between directors in a company and outsiders, an outsider cannot trade solely by following director trades. The implications of the findings are discussed.

This study attempts to determine the level of significance that each insider trade has on the Maltese market, what each director trade conveys to the said market and if these trades are valuable to the outside investors even though such investors do not have knowledge of the grounds upon which the directors trade.

The purpose of this paper is to examine the impact of female board membership on the profitability of corporate insider purchases.

The authors use a classic event study approach. They measure abnormal returns around the insider purchase events, and analyze the cross-sectional variation of this market impact in terms of female board membership, controlling for a range of other factors.

The authors find a strong positive market reaction in the aggregated data, and after decomposing transactions according to gender, they find that the profitability of female directors is statistically indistinguishable from their male counterparts. Additionally, they find evidence that with more females sitting on the board, the profitability of the male directors decreases but the profitability of their female counterparts does not.

The authors’ findings suggest that having females on the board increases corporate governance of male directors. The results also suggest that female directors are no less inclined to exploit the asymmetric information advantage provided by board membership.

The purpose of this paper is to investigate whether proxy statement performance graph disclosures are influenced by the firm's governance structure and management concerns about relative performance.

Logistic regression is used to test whether the level of performance graph disclosure decreases with lower relative performance and higher insider director membership on the compensation committee of the board. Also, Z and t‐statistics test whether bias in the selected peer group benchmark is related to insider membership on the committee.

The empirical results suggest that reporting discretion was exercised for management's benefit. The amount of explicit disclosure on cumulative returns in the performance graph decreases as relative performance declines and decreases when insider directors serve on the compensation committee. Moreover, the presence of insider directors on the compensation committee is associated with a biased choice of peer group benchmark return.

The sample for the study consists of 141 large firms. Future research could examine a larger group of firms that vary in size or other disclosures.

These findings support recent actions taken to improve corporate governance. Further public policy steps could be taken. For example, the SEC could require firms to include an explanation for appointing insiders to the compensation committee.

The results are consistent with managers using discretion over information disclosures and suggest that compensation committees with insider members play a less active role in providing information that is helpful to shareholders.

This paper attempts to examine the activity and involvement of board of directors in internationalization activities of firms in emerging markets, by evaluating the resource provisioning roles of interlocks provided by board of directors, and the frequency of board meetings. We demonstrate that the effectiveness of board involvement is contingent upon the levels of family ownership in firms since family ownership could impact the firm’s ability to utilize the presence of different types of board members.

The authors test our hypotheses on a sample of listed Indian companies, extracted from the Prowess database published by the Centre for Monitoring Indian Economy (CMIE), a database of the financial performance of Indian companies. On a panel of 3,133 firm years of 605 unique Indian firms with foreign investments, over a time period of 2006–2017, the authors apply different estimation techniques.

The results demonstrate that both board meeting frequency and director interlocks are instrumental in supporting internationalization activities in emerging market firms. However, family ownership moderates the role of insider and independent interlocks on internationalization investments in different ways; the authors find that interlocks provided by independent directors support internationalization activities in family firms, whereas those provided by insider directors do not. Further, the study also finds that board meetings are less effective in internationalization of family firms.

The authors conclude that family firms aiming at international diversification require to develop more connected and networked independent directors to enable internationalization in firms. While independent director interlocks enhance the international investments, it is also useful to know that board meetings are ineffective in utilizing the resources in family firms. This points to the possibility that family firms should device mechanisms to integrate family meetings with board meetings so that they can utilize the within-family processes to aid in their internationalization decisions.

The study contributes to resource dependence theory by understanding its limiting role in family firms. Theoretically, it helps delineate the limiting resource provision role of the insider directors vis-à-vis independent directors. The authors argue that the resource provision role of insider director interlocks does not effectively help in internationalization in comparison to independent director interlocks in family-dominated firms. Consequently, the study shows the limiting role of resource provision and utilization by family-owned firms in comparison to non-family-owned firms.

The purpose of this paper is to examine the monitoring effectiveness of insider-dominated boards and outsider-dominated boards on different types of CEOs.

To test whether boards monitor inside CEOs and outside CEOs differently and to compare the sizes of the effects across board types, the paper relates CEO resignations to performance measure. The paper tests the hypotheses using logit models to estimate the probability of a CEO change.

It is widely believed that only an outsider-dominated board can provide effective management oversight. The paper finds evidence supporting this view after categorized CEOs based on their affiliation with their firms upon hire. However, the paper also documents that after the Sarbanes-Oxley Act of 2002 (SOX), an insider-dominated board is just as effective as an outsider board in monitoring if the CEO was initially hired from outside of the firm. This suggests that there is no difference between insider and outsider board monitoring of outside CEOs. Therefore, after SOX, as far as board monitoring is concerned, what matters is the independence between the CEO and the firm rather than the board structure itself.

If effective board monitoring is the reason of the revised listing standards approved by Securities and Exchange Commission (SEC) in 2003 to require companies listed on NYSE or Nasdaq to have a board that is composed of a majority of independent (or outsider) directors, the paper has provided more flexibility and choices to the listed firms. For example, firms that will be better off with insider boards can choose to hire outside CEOs because monitoring effects on outside CEOs are the same regardless of board types after SOX.

The results of this paper have interesting implication. First, the paper has shown that an outsider-dominated board is still a better monitor even after categorized CEOs based on their affiliation with their firms upon hire. Second, if effective board monitoring is the reason of the revised listing standards approved by SEC in 2003 to require companies listed on NYSE or Nasdaq to have a board that is composed of a majority of independent (or outsider) directors, the paper has provided more flexibility and choices to the listed firms. For example, firms that will be better off with insider boards can choose to hire outside CEOs because monitoring effects on outside CEOs are the same regardless of board types after SOX.

This paper investigates if investors consider legal insider trading data while making investment decisions. If any investment decision is based on insider transactions, then it will result in abnormal stock characteristics. The purpose of this paper is to investigate if insider trading affects stock characteristics like price, return and volume. The paper further investigates the effect on stock characteristics after the trade of different types of insiders and the relationship between abnormal return and abnormal volume.

The study uses the event study method to measure the abnormal price, return and volume. Two-stage least square regression is used to investigate the relationship between abnormal return and abnormal volume.

The insider trades affect price, return and volume. The results are identical for both buy and sell transactions. The trades of different types of insiders have diverse effects on stock characteristics. The trades of substantial shareholders give rise to the highest abnormal price and return, whereas the promoters' trades result in the highest abnormal volume. No relationship is detected between abnormal return and volume.

A novel method to calculate the abnormal price is proposed. The effect of trading of all types of insiders on stock characteristics is analyzed. The relationship between abnormal return and abnormal volume, after an insider trade, is investigated.

The purpose of this paper is to use the dynamic capabilities framework to explain the effect of board networks, as a source of intellectual capital, on firm performance. The authors propose that the influence of board interlocks depends on their ability to contribute to strategic decision making. As a result, their effect is subject to the business context in which they occur and the different role of the interconnected directors involved.

The authors use social network analysis to make board connections and to calculate centrality measures. The authors also identify busy boards to analyze whether their effect differs from centrality. The authors estimate the theoretical model using the Generalized Method of Moments in order to take advantage of the panel database.

For a sample of Spanish firms from 1999 to 2015, the results show there is no direct significant effect of directors’ networks on firm performance. However, the authors find a positive and significant influence of intra-industry board connections, particularly when they are established among outsiders.

The Spanish context of the study can limit the generalization of the papers’ results.

The results can be useful both for practitioners – since they can serve as a guide for companies to reformulate their boards in search of the optimal structure-, and when implementing good governance codes – establishing limits for director interlocking.

This study helps to offer a better understanding of how directors’ networks can add value to the firm depending on the kind of resources they provide (context) and the role of the director who is connected.

Board size has received significant attention among researchers and regulators. However, the advisory role of boards has not been studied much. In this study I examine the notion that investors value larger boards for their advisory capabilities. Prior studies examine board size in the context of monitoring role of corporate boards and find opposite effects on debt holders and equity holders. Using market-based measures of total firm performance, which take both equity and debt into account; I find that larger boards are associated with greater economic value added (EVA). Using a sample of S&P 1500 firms from 2000 to 2003 and controlling for various firm and industry characteristics, I also find that the board size is positively associated with firm productivity and various other efficiency measures such as return on assets (ROA), return on equity (ROE) and Sales-Turnover ratio. I argue that firms with larger boards, valuing the advisory role of directors offer greater compensation to the directors. Overall the results indicate that large board size has a positive impact on firm's performance. The results are robust to alternative measures of firm performance and other key variables.

This paper seeks to examine the relationship between board composition and firm performance using a board‐level aggregation variable.

This study uses linear regression to analyze the relationship between board role typology and firm performance using a panel data set of 277 non‐financial listed Malaysian firms over the period 2002‐2007.

The empirical results show that firm‐boards with a high representation of outside and foreign directors are associated with better performance compared to those firm‐boards that have a majority of insider executive and affiliated non‐executive directors.

The findings seem to imply that in widely owned firms a higher proportion of outsiders on the board reduces under‐investment and agency problems, which has significant economic implications.

This is the first study to use a board‐level aggregation variable to demonstrate the impact of boards' resourcefulness on firm performance.