Abstract:Will insider trading affect stock liquidity? Few studies have been done on insider trading in China stock market especially on stock liquidity. This paper studies the stock liquidity effects of insider trading by analyzing the trading data of 1 386 stocks in the period of 2008.1-2009.8. We find that insider trading will not impair stock liquidity. We believe that the main reason of this result is the irrational investment behaviors of outsider investors.