Are European Banks Opaque? Evidence from Trades by Corporate Insiders

Trades by EU corporate insiders are used to investigate bank opacity, both in absolute terms and relative to other type of firms. The average bank insider’s transaction does not earn abnormal returns, neither on purchases nor on sales. Examination of insider trades’ profitability variation along the time dimension and within the banking sector finds no evidence of a greater degree of bank opacity versus other firms. These findings question whether banks should be regarded as intrinsically opaque type of firms, while pointing out how, to evaluate bank opacity, the employed method is crucial especially with respect to the benchmark and the type of information adopted.