Insider Trading and the Exploitation of Inside Information: Some Empirical Evidence

1985 ◽  
Vol 58 (1) ◽  
pp. 69 ◽  
Author(s):  
Dan Givoly ◽  
Dan Palmon
Keyword(s):  
Empirical Evidence ◽  
Insider Trading ◽  
Inside Information

scholarly journals Insider Trading in Germany — Do Corporate Insiders Exploit Inside Information?

2008 ◽  
Vol 1 (2) ◽  
pp. 188-205 ◽  
Author(s):  
Björn M. Dymke ◽  
Andreas Walter
Keyword(s):  
Insider Trading ◽  
Inside Information ◽  
Corporate Insiders

scholarly journals Volume Dynamics and Multimarket Trading

2013 ◽  
Vol 48 (2) ◽  
pp. 489-518 ◽  
Author(s):  
Michael Halling ◽  
Pamela C. Moulton ◽  
Marios Panayides
Keyword(s):  
Empirical Evidence ◽  
Insider Trading ◽  
Institutional Ownership ◽  
Large Set ◽  
Order Flow ◽  
Listed Firms ◽  
Cross Listing ◽  
Multiple Markets ◽  
Multimarket Trading

AbstractThe trading of shares of the same firm in multiple markets has become common over the last 30 years, but there is little empirical evidence on the extent to which investors actively exploit multimarket environments. We introduce a volume-based measure of multimarket trading to address this question. Analyzing a large set of cross-listed firms, we find higher multimarket trading among markets with similar designs and strong enforcement of insider trading laws and for firms with higher institutional ownership. These findings are important for firms evaluating the benefits of cross listing and for markets competing for order flow.

scholarly journals Take-over announcements and insider trading activity on the Johannesburg Stock Exchange

1987 ◽  
Vol 18 (4) ◽  
pp. 198-208 ◽  
Author(s):  
N. Bhana
Keyword(s):  
South Africa ◽  
Insider Trading ◽  
Abnormal Return ◽  
Stock Exchange ◽  
Third Parties ◽  
Inside Information ◽  
The Public ◽  
Public Announcement ◽  
Johannesburg Stock Exchange ◽  
Announcement Date

The objective of this study was to carry out an investigation into the abnormal return behaviour of a sample of 50 acquired companies on the Johannesburg Stock Exchange during the period 1976-1985. Insiders appear to take market positions on prospective take-overs approximately 40 trading days before the announcement, and there appears to be uncontrolled abuse of insider trading rules in the 15 days immediately prior to the take-over announcement date. Legally defined insiders were not responsible for the abuse of inside information relating to the proposed take-overs. It would seem that substantial insider trading is carried out through third parties in order to escape detection of the authorities. The JSE appears to be inefficient in reacting to the public announcement of a planned take-over, and Section 233 of the Companies Act which regulates insider trading in South Africa is clearly ineffective. Various deficiencies and loopholes in the existing legislation are identified and recommendations for amendments are suggested.

scholarly journals European Insider Trading Theory Revisited: The Limits of the Parity-of-Information Theory and the Application of the Property Rights in Information Theory to Activist Investment Strategies

2020 ◽  
Vol 17 (5) ◽  
pp. 558-600
Author(s):  
Ana Taleska
Keyword(s):  
Information Theory ◽  
Property Rights ◽  
Insider Trading ◽  
Public Information ◽  
Investment Strategies ◽  
The European Union ◽  
Inside Information ◽  
Market Participants ◽  
Trade Offs ◽  
Securities Trading

AbstractParity-of-information is purported to be the single overarching policy rationale for the European Union (EU) regulation on insider trading. This is because securities trading on the basis of informational advantages is generally prohibited under EU rules, as is tipping (and issuers’ selective disclosure) of material, non-public information. Yet, EU regulations allow market actors, including investment professionals and analysts, that have discovered valuable information -and thereby, have an informational advantage vis-à-vis their trading counterparties- to trade on this information. Relatedly, issuers of financial instruments, takeover bidders and merging parties can share information with a selected group of investors prior to public announcement of the transaction (market sounding), whereas firms can delay public disclosure of inside information and prevent all other market participants from trading on this information. I argue that these exceptions from the parity-of-information theory are -from a doctrinal standpoint- best explained as property rights in information of market actors that have developed new proprietary information with respect to European listed securities. This article, therefore, aims at providing a property rights account of the exceptions to the parity-of-information theory and it illustrates the trade-offs between the parity-of-information and the property rights in information theories underlying European insider trading rules. By extension, I analyze the specific case of activist campaigns as inside information and argue that it would be consistent with the property rights approach to allow activist investors to share their investment and trading strategies with other market participants that further their activist agenda.

Margin Loans, Insider Trading and Disclosure Obligations: A Study of the Securities Trading Policies of the ASX 100

2020 ◽  
Author(s):  
Juliette Overland
Keyword(s):  
Insider Trading ◽  
Best Practice ◽  
Listed Company ◽  
Listed Companies ◽  
Legal Issues ◽  
Law Reform ◽  
Inside Information ◽  
Practice Recommendations ◽  
Securities Trading ◽  
Disclosure Obligations

Complex legal issues arise when listed company personnel enter margin loans over company securities. Does insider trading occur on a forced sale of company securities if the borrower possesses inside information? If a material number of company securities may be subject to a forced sale, must the listed company disclose it to the market? Are company personnel obliged to inform a listed company they have a margin loan over company securities? There is significant variation in the manner in which listed companies address these issues, which include applying prohibitions, requiring approvals, and obliging notifications. This article undertakes a detailed study of the securities trading polices of the ASX 100 to analyse the ways in which listed companies treat margin loans over company securities. This article proposes law reform and the development of ‘best practice’ recommendations for the treatment of margin loans in the securities trading policies of listed companies.

Gender Differences in Executives’ Access to Information

2017 ◽  
Vol 52 (3) ◽  
pp. 991-1016 ◽  
Author(s):  
A. Can Inci ◽  
M. P. Narayanan ◽  
H. Nejat Seyhun
Keyword(s):  
Gender Differences ◽  
Insider Trading ◽  
Access To Information ◽  
Trading Behavior ◽  
Informal Networks ◽  
Inside Information ◽  
Female Executives ◽  
Corporate Executives ◽  
Formal Status

We provide novel evidence on gender differences in insider-trading behavior and the profitability of senior corporate executives. On average, both female and male executives make positive profits from insider trading. Males, however, earn significantly more than females in equivalent positions and also trade more than females. These gender differences disappear when we limit the sample to firms in which female trading is relatively high. Collectively, these results suggest that female executives have a disadvantage relative to males in access to inside information, even if they have equal formal status, and informal networks may play an important role in attenuating this disadvantage.

scholarly journals THE IMPACT OF THE FINANCIAL CRISIS ON INSIDER TRADING PROFITABILITY IN BELGIUM

2012 ◽  
Vol 14 (2) ◽  
pp. 364-385 ◽  
Author(s):  
Debby Van Geyt ◽  
Philippe Van Cauwenberge ◽  
Heidi Vander Bauwhede
Keyword(s):  
Financial Crisis ◽  
Insider Trading ◽  
Global Financial Crisis ◽  
Abnormal Returns ◽  
Inside Information ◽  
Corporate Insiders ◽  
Study Methodology ◽  
Fundamental Value ◽  
The Impact ◽  
Financial Environment

The 2007 global financial crisis led to a chaotic financial environment characterized by highly uncertain and volatile stock markets. This created additional uncertainty about the fundamental value of shares and potentially increased the benefit of inside information. In this paper, we use event study methodology to examine whether Belgian corporate insiders were able to benefit from these turbulent market conditions. Given the large weight of financial institutions, the Belgian stock market was especially vulnerable to the financial crisis and provides an interesting environment to test this hypothesis. Our results show that, while insiders are generally able to earn abnormal returns, these returns are significantly higher during the years of the financial crisis.

Germany’s New Insider Law: The Empirical Evidence after the First Year

2006 ◽  
Vol 7 (4) ◽  
pp. 449-462 ◽  
Author(s):  
Olaf Stotz
Keyword(s):  
Transaction Costs ◽  
Empirical Evidence ◽  
Insider Trading ◽  
Abnormal Return ◽  
Abnormal Returns ◽  
First Year ◽  
Insider Trades ◽  
Time Period ◽  
Trading Activities

Abstract This paper investigates insider trading activities in German stocks during the first year following implementation of the new Insider Law on 1 July 2002. It can be observed that insiders act as contrarian investors. They buy stocks after prices have fallen and sell stocks after prices have risen. In general, insider trades are very profitable. A typical stock purchased by an insider yields an abnormal return of almost 3 per cent during the 25 days following the transaction. In contrast, a typical stock that has been sold by insiders achieves an abnormal return of nearly -3 per cent over the same time period. Outsiders who copy the transactions of insiders can achieve nearly the same abnormal returns. Abnormal returns remain substantial even after transaction costs. The results suggest that prices of stocks in which insiders trade do not seem to be semi-strong efficient.

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