The performance of corporate legal insiders on the French stock market

Stanislas Nivelleau de La Brunière (1) , Jean-Come Haye (1) , Paolo Mazza (2)

1 IESEG School of Management Lille
2 LEM - Lille économie management - UMR 9221

This paper aims to examine the performance of legal insiders on the French market, from January 2011 to December 2017. We focus on purchase transactions in order not to face the many reasons that can force investors to close their position. Our results suggest that insiders generate an excess return over the SBF120 index on the short run. An outsider mimicking insiders’ actions can generate similar profits. This implies that their informational advantage is rather short-lived. However, both of them fail to beat simulated random investors in general. Our findings highlight that the outperformance is rather stock-specific: insiders beat random investors for some stocks. We also disentangle management from non-management insiders and show that non-management insiders generate a lower average excess return than management insiders. Our simulation setup however shows that none of the groups is able to beat random investors for all the stocks, even if management insiders outperform the simulated series in more cases than non-management insiders.

Mots clés: Insider; French stock market; Simulation; Trader’s behavior; Position

Domaines: Sciences de l'Homme et Société; Gestion et management

Stanislas Nivelleau de La Brunière, Jean-Come Haye, Paolo Mazza. The performance of corporate legal insiders on the French stock market. International Review of Law and Economics, 2020, 61, pp.105880. ⟨10.1016/j.irle.2019.105880⟩. ⟨hal-02998232⟩