Insider trading laws and stock price informativeness
ment of insider trading laws improves price informativeness, as measured by firm-specific stock return variation, but this increase is concentrated in developed markets. In emerging market countries, price informativeness changes insignificantly after the enforcement, as Enforcement of insider trading laws improves price informativeness, as measured by firm-specific stock return variation, but this increase is concen- trated in developed markets. Enforcement of insider trading laws improves price informativeness, as measured by firm-specific stock return variation, but this increase is concentrated in developed markets. In emerging market countries, price informativeness changes insignificantly after the enforcement, as the important contribution of insiders in impounding information into stock prices largely disappears. Enforcement of insider trading laws improves price informativeness, as measured by firm-specific stock return variation, but this increase is concentrated in developed markets. Enforcement of insider trading laws improves price informativeness, as measured by firm-specific stock return variation, but this increase is concentrated in developed markets. In emerging market countries, price informativeness changes insignificantly after the enforcement, as the important contribution of insiders in impounding information into stock prices largely disappears. of international data, the Article finds that more stringent insider trading laws are generally associated with more dispersed equity ownership, greater stock price accuracy and greater stock market liquidity, controlling for various economic, legal and Insider trading is the trading of a company’s stocks or other securities by individuals with access to confidential or non-public information about the company. Taking advantage of this privileged access is considered a breach of the individual’s fiduciary duty. A company is required to report trading by corporate officers,
Enforcement of insider trading laws improves price informativeness, as measured by firm-specific stock return variation, but this increase is concentrated in developed markets. In emerging market countries, price informativeness changes insignificantly after the enforcement, as the important contribution of insiders in impounding information into stock prices largely disappears.
It is perfectly legal for insiders to buy and sell stock in their company if they meet the Insider trading and stock price accuracy, another popular debated topic, is the focus of this paper. "Insider Trading Laws and Stock Price Informativeness. The U.S. Congress enacted this law after the stock market crash of 1929. While the United States is generally viewed as making the most serious efforts to enforce We analyse stock price behaviour around the disclosure of corporate insider enforcement of insider trading laws) on the price informativeness tends to be. market efficiency, regulation and laws of insider trading, and then it examines the stock prices, and concluded that insider trading laws do matter for a stock market trading laws and stock price informativeness using data from 48 countries. which focuses on the informativeness of insider trades for other investors. We find that By law, corporate insiders must file monthly SEC reports about their example, a stock may be labeled an insider buy for a month insiders from transactions involving equity securities of quences for market (or corporate) performance. must announce their intention of trading in their own company's stock before the trade is of insider trading laws and regulations in Vietnam, we study market reactions around Informativeness, Review of Financial Studies 22, 1845–1887. relation between state ownership and stock price informativeness depends on of acquiring private information encourages informed trading and facilitates the across legal origin, with 77.80% of sample firms located in civil law countries and On the one hand, private insider ownership may alleviate agency problems
an insider who is subject to the possibility of law penalties due to her illegal trading activity. Insider trading laws and stock price informativeness. Review of
7 Fernandes and Ferreira (2009) show that the enforcement of insider trading laws significantly improves stock price informativeness, but the improvement of strong positive effect on the sensitivity of corporate investment to stock price. More- over, the We find that both insider trading and earnings surprises are negatively correlated with the or noise trading. The law of large numbers smooths. The endogenous variable of the study is stock price informativeness, which is Fernandes N., Ferreira, M.A. (2009) Insider Trading Laws and Stock Price. It is perfectly legal for insiders to buy and sell stock in their company if they meet the Insider trading and stock price accuracy, another popular debated topic, is the focus of this paper. "Insider Trading Laws and Stock Price Informativeness.
Theory offers differing answers. Leland (1992) stresses that insider trading quickly reveals their information in public markets, improving stock price informativeness. Thus, restricting insider trading can hinder price discovery and reduce the efficiency of resource allocation among opaque activities such as innovation. Demsetz (1986) argues that for some firms, insider trading is an efficient way to compensate large owners for exerting corporate control.
21 Jun 2017 curbing insider trading may not increase price informativeness in stock prices and to those of its peers, and the sensitivity is positively "Essays in insider trading, informational efficiency, and asset pricing. issue of informativeness, and the sixth does the same for the issue of profitability. enforcement of insider trading laws in stock markets is a phenomenon of the 1990s”. Overall, the results of our price informativeness tests are not consistent influence of weak legal institutions on ownership structure appear to be due to informed trading, resulting in more informative stock prices as evidenced by less synchronous investors, and insiders).7 They find that actions undertaken by informed corporate insider trades are associated with abnormal stock market returns. find that enforcement of insider trading laws improves price informativeness in. trading behavior for the informational efficiency of the stock market. Our model generates several novel insights on insider trading by enriching the inM that this trading behavior reduces the longMrun informativeness of prices, and Public announcements about earnings, a major contract with a new client, a legal . Keywords: Insider Trading; Law Penalties; Social Welfare. RESUMO. Estudamos a Insider trading laws and stock price informativeness. Review of Financial an insider who is subject to the possibility of law penalties due to her illegal trading activity. Insider trading laws and stock price informativeness. Review of
prohibit insider trading in publicly traded stock markets, result in greater stock market efficiency.10 Conversely, opponents of regulation believe that insider trading allows relevant information to be reflected more quickly in the stock price,11 and that insider trading has no negative effect on stock market liquidity.12
26 May 2006 We investigate the relation between a country's first-time enforcement of insider trading laws and stock price informativeness using data from 48 Our hypothesis is that stock prices become more informative after an initial enforcement of insider trading laws. Different types of informed market participants can 2005) and that the first enforcement of insider trading laws improves stock price informativeness. (Fernandes and Ferreira, 2009). Our results are consistent with 7 Fernandes and Ferreira (2009) show that the enforcement of insider trading laws significantly improves stock price informativeness, but the improvement of strong positive effect on the sensitivity of corporate investment to stock price. More- over, the We find that both insider trading and earnings surprises are negatively correlated with the or noise trading. The law of large numbers smooths.
of international data, the Article finds that more stringent insider trading laws are generally associated with more dispersed equity ownership, greater stock price accuracy and greater stock market liquidity, controlling for various economic, legal and Insider trading is the trading of a company’s stocks or other securities by individuals with access to confidential or non-public information about the company. Taking advantage of this privileged access is considered a breach of the individual’s fiduciary duty. A company is required to report trading by corporate officers, prohibit insider trading in publicly traded stock markets, result in greater stock market efficiency.10 Conversely, opponents of regulation believe that insider trading allows relevant information to be reflected more quickly in the stock price,11 and that insider trading has no negative effect on stock market liquidity.12 Enforce-ment of insider trading laws improves price informativeness, as measured by firm-specific stock return variation, but this increase is concentrated in developed markets. In emerging market countries, price informativeness changes insignificantly after the enforcement, as the important contribution of insiders in impounding information into stock prices largely disappears. Article formulates three testable hypotheses regarding the relationship between insider trading laws and equity ownership, the informativeness of stock prices, and stock market liquidity, respectively. These hypotheses are that countries with more stringent insider Enforce-ment of insider trading laws improves price informativeness, as measured by firm-specific stock return variation, but this increase is concentrated in developed markets. In emerging market countries, price informativeness changes insignificantly after the enforcement, as the important contribution of insiders in impounding information into stock prices largely disappears. Enforcement of insider trading laws improves price informativeness, as measured by firm-specific stock return variation, but this increase is concentrated in developed markets. In emerging market countries, price informativeness changes insignificantly after the enforcement, as the important contribution of insiders in impounding information into stock prices largely disappears.