“Insider giving”—An unfortunate donation strategy used by corporate insiders to avoid losses

[jasonk]

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“Insider giving” is sad to learn about and certainly inflates donation figures.

Quoting from the abstract of ‘Insider Giving’ (71 Duke Law Journal (Forthcoming 2021; UCLA School of Law, Law-Econ Research Paper No. 21-02):

Corporate insiders can avoid losses if they dispose of their stock while in possession of material, non-public information. One means of disposal, selling the stock, is illegal and subject to prompt mandatory reporting. A second strategy is almost as effective and it faces lax reporting requirements and legal restrictions. That second method is to donate the stock to a charity and take a charitable tax deduction at the inflated stock price. “Insider giving” is a potent substitute for insider trading. We show that insider giving is far more widespread than previously believed.