Inside the Director Network: When Directors Trade Inside, Interlock, and Unconnected Stocks

Members of corporate boards earn significant abnormal returns, both when they buy their company’s own stock as an insider, and when they buy stocks for which they are not classified as an insider. As outsiders, corporate directors earn larger abnormal returns when they buy stocks for which they have an interlocking board connection, and when they have higher status within the network of corporate boards. We also find similar trading inclinations and even greater performance for the family members of directors, indicating that the benefits of access to the corporate network spill over to the family networks of insiders.