Capitol Gains: Investigating Insider Trading in the United States House of Representatives Using Time Series Analysis

Abstract

This thesis investigates closed-door congressional meetings as a potential source of insider trading in the United States House of Representatives. Employing two sample t-tests, ARIMA models, and regression discontinuity design (RDD), the trading activity of congresspeople around dates when they may receive nonpublic information is analyzed. Through these methods we find that there is a statistically significant immediate increase in trades made by representatives on the day of closed-door meetings. This phenomenon is not as pronounced in open meetings or during normal trading days. This finding contributes evidence to the idea that congresspeople use the confidential information in these meetings for personal financial gain. From these results, this thesis suggests the need for stricter transparency and regulation regarding congresspeople’s trading activities.