Theses and Dissertations
Advisor
Cline, Brandon
Committee Member
Taboada, Alvaro
Committee Member
Blank, Douglas, II
Committee Member
Highfield, Michael
Committee Member
Campbell, Randall
Date of Degree
8-7-2025
Original embargo terms
Embargo 2 years
Document Type
Dissertation - Open Access
Major
Business Administration (Finance)
Degree Name
Doctor of Philosophy (Ph.D.)
College
College of Business
Department
Department of Finance and Economics
Abstract
This dissertation comprises three chapters that explore how U.S. senators’ financial disclosure practices and personal life behavior relate to opportunistic informed trading. As members of Congress, senators often gain early access to sensitive, market moving, non-public information, giving them a unique informational advantage over general investors. To mitigate potential misuse of this informational advantage and promote transparency and efficiency in financial markets, the STOCK Act of 2012 requires senators to disclose their financial transactions exceeding $1,000 within 45 days. Disclosures made after this 45-day window are considered delinquent. In the first chapter, I examine whether such delinquent disclosures are merely unintentional or deliberate attempts to conceal trades and profit from material non-public information. Analyzing hand-collected open market transactions from 2012 to 2022, I find that 41.08% of trades were disclosed after the legal deadline. These delayed disclosures are associated with significantly higher abnormal returns on purchases and smaller losses on sales, suggesting opportunistic informed trading. I also find that reporting violations are significantly more pronounced in trades with high information asymmetry and conflicts of interest, such as those related to committee assignments and stealth trading patterns. In the second chapter, I study whether signals of integrity in a politician’s personal life relate to opportunistic informed trading. Specifically, I examine whether personal misconduct correlates with opportunistic trading behavior. Using a hand-collected dataset on U.S. senator’ personal misconduct and open market transactions from 2012 to 2022, I find that senators with a recorded history of personal misconduct earn significantly higher abnormal returns and are more likely to violate the STOCK Act’s disclosure rules. The findings suggest that unethical behavior in senators’ personal lives may extend to financial decision-making while in office. In the third chapter, I evaluate the quality of financial disclosures by analyzing amendment filings. I find that 8.8% of reported trades are later amended, raising concerns about the reliability of initial disclosures and their implications for market efficiency. Amended trades underperform non-amended trades, suggesting that some amendments may reflect corrective adjustments for unintentional reporting errors or omissions.
Recommended Citation
Islam, Md Nurul, "Financial disclosure, personal life behavior, and insider trading in Congress" (2025). Theses and Dissertations. 6652.
https://scholarsjunction.msstate.edu/td/6652
