Inside large U.S. firms, similarity quietly moves information. Analyzing insider trades from 1995–2016, we find that sharing a salient identity (especially gender) between insiders and the CEO/CFO opens informal channels that show up in trading results. When a woman holds the top executive or finance seat, female insiders’ trades become more profitable while men’s edge shrinks. The effect intensifies where formal interactions create proximity, such as serving on the same committees and sitting in meetings with multiple women present, and it is most visible in sales that anticipate bad news. Other commonalities, such as age, ethnicity or alma mater, help too, but less so than gender. We believe our result is important for companies: diversity doesn’t just change who’s in the room; it rewires the firm’s information sharing processes.
Elvira Scarlat 