Interesting research post the GFC from Sanjai Bhagat and Brian Bouton (http://leeds-faculty.colorado.edu/bhagat/BankComp-Capital-Jan2011.pdf)
This research uncovered the following little gem –
“The key finding is that chief executives were “30 times more likely to be involved in a sell trade compared with an open-market buy trade” of their own bank’s stock and “the dollar value of sales of stock by bank C.E.O.’s of their own bank’s stock is about 100 times the dollar value of open market buys.” (See page 4 of the report.)
If the chief executives had really believed in what their banks were doing, they would have wanted to hold this stock — or even buy more. Disproportionately, more sales than purchases strongly suggests that the chief executives felt their stock was more likely overvalued than undervalued.”
This raises the notion of public versus private face. During the GFC bankers went out of their way to convince others that their organisations were well run, prudent in their risk management and above all not going down the crapper. Surprise, surprise they thought something else in private.