Corporate social responsibility and insider trading profitability: Evidence from an emerging market

In this study, we examine whether and how corporate social responsibility (CSR) affects insider trading profitability by using a sample of Chinese listed firms from 2011 to 2018. We find that CSR is positively associated with insider trading profitability, especially insider sale profitability, which indicates that insiders tend to reap private benefits from CSR. Our findings are robust to the consideration of alternative proxies, sample bias, and endogeneity concerns. Moreover, we find that the positive relation between CSR and insider trading profitability is more significant before the regulator strengthens its supervision of insider trading, and that this positive relation is weakened by the nature of state-owned enterprises (SOEs), institutional ownership, and analyst coverage.