A Dilemma of Self-interest vs. Ethical Responsibilities in Political Insider Trading
The result's identifiers
Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F62156489%3A43110%2F23%3A43922126" target="_blank" >RIV/62156489:43110/23:43922126 - isvavai.cz</a>
Result on the web
<a href="https://doi.org/10.1007/s10551-022-05265-0" target="_blank" >https://doi.org/10.1007/s10551-022-05265-0</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1007/s10551-022-05265-0" target="_blank" >10.1007/s10551-022-05265-0</a>
Alternative languages
Result language
angličtina
Original language name
A Dilemma of Self-interest vs. Ethical Responsibilities in Political Insider Trading
Original language description
Political insider trading has brought substantial attention to ethical considerations in the academic literature. While the Stop Trading on Congressional Knowledge (STOCK) Act prohibits members of Congress and their staff from leveraging non-public information to make investment decisions, political insider trading still prevails. We discuss political ethics and social contract theory to re-engage the debate on whether political insider trading is unethical and raises the issues of conflict of interest and social distrust. Empirically, using a novel measure of information risk, we find that senator trades are associated with substantially high levels of information asymmetry. Moreover, based on inside political information, senators earn significant market-adjusted returns (4.9% over 3 months). Thus, our results do not support the prediction made by social contract theory and thereby provide a potential resolution to the ongoing debate on banning stock trading for members of Congress.
Czech name
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Czech description
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Classification
Type
J<sub>imp</sub> - Article in a specialist periodical, which is included in the Web of Science database
CEP classification
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OECD FORD branch
50206 - Finance
Result continuities
Project
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Continuities
I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace
Others
Publication year
2023
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů
Data specific for result type
Name of the periodical
Journal of Business Ethics
ISSN
0167-4544
e-ISSN
1573-0697
Volume of the periodical
187
Issue of the periodical within the volume
1
Country of publishing house
NL - THE KINGDOM OF THE NETHERLANDS
Number of pages
31
Pages from-to
137-167
UT code for WoS article
000867523500001
EID of the result in the Scopus database
2-s2.0-85139782788