This paper examines the influence of corporate governance systems on insiders' ability to profit from their information advantage and the ways through which corporate governance systems influence such ability. We find that corporate governance significantly reduces the profitability of insider sales but not that of insider purchases. Given that sales involve greater legal risk than purchases, the results suggest that well-governed firms restrict informed insider trading mainly to reduce legal risk. We also find that better-governed firms reduce the profitability of insider sales by increasing the likelihood of adopting ex-ante preventive measures (e.g., voluntary insider trading restriction policies), implementing such measures more effectively, and taking ex-post disciplinary actions more actively. These results highlight how better-governed firms are able to restrict insiders from exploiting private information. •Corporate governance restricts the profitability of insider sales but not that of insider purchases.•Better-governed firms are more likely to adopt voluntary insider trading restriction policies.•Better-governed firms enforce voluntary insider trading restriction policies more effectively.•Better-governed firms are more likely to discipline CEOs who engage in informed insider sales transactions.