Share pledging, the practice in which shareholders secure a loan using their shares, has become a global phenomenon in recent years. In this paper, we investigate the effect of such corporate insider actions on outsider wealth during the pandemic. Concretely, we examine how firms’ market value change when corporate insiders pledge their shareholdings during China’s COVID-19 outbreak. It is found that market investors responded adversely to share pledging announcements by firms in the high pandemic-affected regions. Besides, the state ownership and better corporate governance structures of the pledged firms could mitigate such adverse impacts. Our study highlights a specific externality generated by corporate insiders to outside shareholders during a crisis period.