Trading Behaviors of Insiders: A Speculative Trading Model and Empirical Evidence

Insider trading has been a widely discussed topic since the 1980s. Apart from discussing whether insider trading should exist, previous studies gradually began to study the factors affecting insider trades. This study establishes a market equilibrium model to identify factors that may affect the expected earnings and expected losses in insider trades. It also offers new evidence that factors, such as social factors, cost factors, moral factors, and bad news factors, may affect evaluation of the expected earnings and expected losses in insider trades. Our results have important implications for future studies developing a more pluralistic view of insider trading behavior.