Political Insider Trading: A narrow versus comprehensive approach

We examine senators’ electronically filed stock transactions between 2012 and 2019 to assess the extent of politician’s insider trading. Our results suggest that senators use inside political information when investing earn significant market-adjusted returns. To extend traditional return-based methods, we propose a new comprehensive approach based on abnormal idiosyncratic volatility (AIV), which captures degree asymmetry around their trading dates. document senator trades are associated with substantially high levels AIV, suggesting they represent only tip iceberg, since mass unfiled using same remains undetected.