Insider Trading and Large Chapter 11 Bankruptcies in USA

The Enron and WorldCom debacles raised questions about the state of corporate governance in the United States. Insider trading is one aspect of corporate governance highlighted in these cases. In this paper, we explore insider trading of large Chapter 11 bankruptcy filing firms during the twelve-year period of 1995-2006. We find that insiders in these firms, on average, do not use private information for gain or loss avoidance.