When attentive insider trading matters: Evidence from government investment

We examine whether insiders can exploit public information to increase their trading profitability. By exploiting, as a quasi-natural experiment, the Bipartisan Infrastructure Law (BIL), announced in the U.S. in March 2021 and implemented in November 2021, we provide evidence that insiders earn higher profits when government investment plans are announced. The increased insider trading profitability is more pronounced in firms with high information asymmetry, high growth, in opportunistic trades, as well as for top executives and persistently profitable insiders. Overall, our evidence supports the attentive hypothesis that insiders earn profits by trading on public information relevant to their firms.