A Case Study of Illegal Insider Trading — The Scandal of Vultures' Insider Trading

2011 ◽  
Vol 14 (01) ◽  
pp. 81-99 ◽  
Author(s):  
Yu Chuan Huang ◽  
Shu Hui Chan
Keyword(s):  
Insider Trading ◽  
Stock Price ◽  
Annual Report ◽  
Investment Decision ◽  
Market Liquidity ◽  
Insider Information ◽  
Empirical Results ◽  
Window Dressing ◽  
Negative News

The purpose of this paper is to look at the duration of the four-month period before the window dressing of Power Quotient International Co., LTD. (PQI) annual report between 2004 and 2005 was disclosed. The vultures sold 6,373,000 shares of PQI's stock based on the illegally obtained insider information. The empirical results indicate that the vultures' selling did not make PQI's stock price go down during insider period, but PQI's stock price did appear to rise and significantly exceeded the non-insider period. However, the proportion of vultures' selling is negatively correlated with the changes in PQI's stock price. The effect of vultures' selling is indifferent from the effect of non-vultures' selling during insider period. Market liquidity is also affected unfavorably in the presence of vultures' trading. Additionally, the newspaper's reports on PQI's positive or negative news significantly influence the investment decision of investors in Taiwan, and significantly influence the PQI's price changes and market liquidity.

The Value of Assurance on Voluntary Nonfinancial Disclosure: An Experimental Evaluation

2009 ◽  
Vol 28 (1) ◽  
pp. 137-151 ◽  
Author(s):  
Paul J. Coram ◽  
Gary S. Monroe ◽  
David R. Woodliff
Keyword(s):  
Attribution Theory ◽  
Performance Indicators ◽  
Stock Price ◽  
Annual Report ◽  
Corporate Disclosure ◽  
Financial Report ◽  
Nonfinancial Performance ◽  
Assurance Services ◽  
Context Specific

SUMMARY: This study examines whether assurance on the voluntary provision of nonfinancial performance indicators affects the stock price estimates of a group of sophisticated financial report users. We conducted an experiment where participants were provided with a case study containing excerpts from a hypothetical company's annual report. Nonfinancial performance and assurance were manipulated in a 2 (positive and negative nonfinancial performance indicators) ×2 (assurance and no assurance) +1 (control condition) between-subjects design. After reading the case materials, the participants indicated whether they believed the company's stock price would increase or decrease based on the information provided. As expected, we found that the nonfinancial performance indicators had a significant effect on stock price estimates. In addition, consistent with attribution theory, an assurance report on the voluntarily disclosed nonfinancial performance indicators only had a significant effect on stock price estimates when the nonfinancial performance indicators were positive, suggesting that the value of assurance is context-specific. Our research contributes to the discussion on the value of expanded assurance services and also on the value of enhanced corporate disclosure.

Ambiguity in Insider Trading Regulations: Saudi Arabia as a Case Study

2020 ◽  
Vol 34 (4) ◽  
pp. 408-427
Author(s):  
Yahya A. Alomari
Keyword(s):  
Saudi Arabia ◽  
Insider Trading ◽  
Public Information ◽  
Case Law ◽  
Insider Information ◽  
The Law ◽  
Definition Of ◽  
Criminal Conduct ◽  
Material Information

Abstract The Saudi legal system recognises insider trading as a crime and has established laws in order to prevent it. Yet, the complicated nature of insider trading makes it challenging to enact regulations that cover all of the aspects of the crime and clearly identify criminal conduct. This article analyses insider trading regulations in Saudi Arabia and addresses their ambiguities. This article specifies current Saudi regulations pertaining to the crimes of insider trading and disclosing material information, as well as analysing both crimes. It addresses ambiguities found in the language of the law as well as in case law. This article also criticises the definition of insider information under the law. The issue of ‘use’ versus ‘possession’ is discussed: namely, whether what is prohibited is trading on the basis of material non-public information or trading while in possession of material non-public information.

scholarly journals Differences In Intrinsic Value With Stock Market Prices Using The Price Earning Ratio (Per) Approach As An Investment Decision Making Indicator (Case Study Of Manufacturing Companies In Indonesia Period 2016 - 2017)

2019 ◽  
Vol 1 (1) ◽  
pp. 82-92
Author(s):  
Ardy Indra Lekso Wibowo Putra ◽  
Aditya Dwiansyah Putra ◽  
Murni Sari Dewi ◽  
Denny Oktavina Radianto
Keyword(s):  
Decision Making ◽  
Stock Market ◽  
Stock Price ◽  
Stock Exchange ◽  
Intrinsic Value ◽  
Investment Decision ◽  
Manufacturing Companies ◽  
Market Prices ◽  
Investment Decision Making

An investor must be able to consider all kinds of steps that will be taken or that will be carried out, assessing stocks - shares that will provide optimal benefits in making an investment decision. By analyzing the intrinsic value of the price of a company's stock, investors can assess the fairness of the stock price. The method used to analize intrinsic value is fundamental analysis using the Price Earning Ratio (PER) approach. The samples to be taken in this research are manufacturing companies in Indonesia which are listed on the Indonesia Stock Exchange (IDX) for the period 2016 - 2017 with certain criteria. The results of this research will show that the shares of companies listed are in overvalued, undervalued or correctly valued conditions. So investors can decide to buy, hold or sell their shares.

scholarly journals To Define Window Dressing in the State Owned Enterprises and Private Companies (Case Study in Indonesia Stock Exchange LQ45)

2020 ◽  
Vol 17 ◽  
Keyword(s):  
Private Sector ◽  
Capital Market ◽  
Stock Price ◽  
Stock Exchange ◽  
Short Term ◽  
Private Companies ◽  
Window Dressing ◽  
Agriculture Industry

Window dressing in capital market can be defined as the activities of company to increase the stock price. This study was conducted to observe all the activities of window dressing in some companies listed in stock market. The detection of window dressing in this study was focused based on the samples from state owned companies (Telekomunikasi Indonesia Tbk, and Adhi Karya Tbk) and private sector from Astra Agro Lestari (Agriculture Industry). GARCH model was used while window dressing was analyzed by using the method given by Owens and Wu (2011). Results indicate that the best model to explain the behavior of volatility is AR(1)-GARCH(1,1). However, window dressing for three companies mentioned was occurred in 2014-2016; 2014 and 2016, respectively. In additional to that the t-test, was found to be significant for the three companies while the short-term average was above than the long-term average of the year.

Securitization and Insider Trading

2015 ◽  
Vol 91 (2) ◽  
pp. 649-675 ◽  
Author(s):  
Stephen G. Ryan ◽  
Jennifer Wu Tucker ◽  
Ying Zhou
Keyword(s):  
Financial Crisis ◽  
Stock Returns ◽  
Business Model ◽  
Insider Trading ◽  
Private Information ◽  
Stock Price ◽  
Data Availability ◽  
Insider Information ◽  
Negatively Associated ◽  
Crisis Period

ABSTRACT Securitizations are complex and opaque transactions. We hypothesize that bank insiders trade on private information about banks': (1) securitization-related recourse risks, (2) not-yet-reported current-quarter securitization income, and (3) securitization-based business model sustainability. We provide evidence that proxies for each of these types of insider information are positively associated with insider trading. Specifically, we find that net insider sales in the 2001Q2–2007Q2 pre-financial crisis quarters predict not-yet-reported non-performing securitized loans and securitization income for those quarters, and that net insider sales during 2006Q4 predict write-downs of securitization-related assets during the 2007Q3–2008Q4 crisis period. We find that net insider sales are more negatively associated with banks' subsequent stock returns in their securitization quarters than in other quarters. In supplemental analysis, we show that the above findings are driven by trades by banks' CEOs and CFOs, and that insiders avoid larger stock price losses through 10b5-1 plan sales than through non-plan sales. Data Availability: All data are available from public sources.

scholarly journals Pengaruh Pengungkapan Laporan Tahunan Periode 2014-2018 dan Ukuran Perusahaan Terhadap Harga Saham. (Studi Kasus Pada Perusahaan BUMN yang Sahamnya Terdaftar Dalam IDX BUMN20)

2020 ◽  
Vol 12 (2) ◽  
pp. 203-214
Author(s):  
Demetrius Kunto Wibisono ◽  
Esther Yolanda
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Annual Report ◽  
Financial Statements ◽  
Company Size ◽  
Variable Size ◽  
The Public ◽  
Testing Method ◽  
Research Sector

This study aims to find out how the influence of Disclosure of Financial Statements for the period 2014 - 2018 and Company Size on the Stock Price. This case study was conducted by taking a sample of companies list on IDX BUMN20. This study uses the hypothesis testing method using IBM SPSS Statistics Subscription version 23. Based on the results of the study found that an increase in average disclosure in all companies listed on the IDX, in other words, an increase in awareness of the management of companies listed on the IDX to report both financial and non-financial information to the public. In addition, companies listed on the IDX are increasingly obedient to the policies made by the regulator (OJK) related to the disclosure of financial statements. The Annual Disclosure Variable does not partially affect the company's stock price, this is due to differences in the research sector and research year. Partially, the variable size of the company has an influence on stock prices, this is because investors are interested in investing in companies that have large assets and have a large market capitalization because they are considered more profitable. Simultaneously, the Annual Report Disclosure variable and company size variables have a significant effect on stock prices.  Keywords: Annual Report Disclosure, Company Size, and Stock Price.

scholarly journals Differences In Intrinsic Value With Stock Market Prices Using The Price Earning Ratio (Per) Approach As An Investment Decision Making Indicator (Case Study Of Manufacturing Companies In Indonesia Period 2016 - 2017)

2019 ◽  
Vol 1 (1) ◽  
pp. 82-92
Author(s):  
Ardy Indra Lekso Wibowo ◽  
Aditya Dwiansyah Putra ◽  
Murni Sari Dewi ◽  
Denny Oktaviana Radianto
Keyword(s):  
Decision Making ◽  
Stock Market ◽  
Stock Price ◽  
Stock Exchange ◽  
Intrinsic Value ◽  
Investment Decision ◽  
Manufacturing Companies ◽  
Market Prices ◽  
Investment Decision Making

An investor must be able to consider all kinds of steps that will be taken or that will be carried out, assessing stocks - shares that will provide optimal benefits in making an investment decision. By analyzing the intrinsic value of the price of a company's stock, investors can assess the fairness of the stock price. The method used to analize intrinsic value is fundamental analysis using the Price Earning Ratio (PER) approach. The samples to be taken in this research are manufacturing companies in Indonesia which are listed on the Indonesia Stock Exchange (IDX) for the period 2016 - 2017 with certain criteria. The results of this research will show that the shares of companies listed are in overvalued, undervalued or correctly valued conditions. So investors can decide to buy, hold or sell their shares.

Opportunities for improving the insider laws: A comparative analysis of the practice in the USA and Russia

2020 ◽  
Vol 26 (4) ◽  
pp. 796-814
Author(s):  
E.K. Ovakimyan
Keyword(s):  
Financial Markets ◽  
Insider Trading ◽  
Negative Impact ◽  
Business Environment ◽  
Market Manipulation ◽  
Insider Information ◽  
Analysis And Synthesis ◽  
The Usa ◽  
Legislative Perfection ◽  
Definition Of

Subject. The article examines the laws regulating insider trading. Objectives. The study outlines recommendations for refining Law On Countering the Illegal Use of Insider Information and Market Manipulation and Amendments to Some Legislative Acts of the Russian Federation, № 224-ФЗ of July 27, 2010. Methods. The methodological framework includes a general dialectical method, analysis and synthesis, induction and deductions, and some specific methods, such as comparative and formal logic analysis to specify the definition of insider information, structural logic and functional analysis to improve the mechanism for countering insider trading and market manipulation. Results. We discovered key drawbacks to be addressed so as to improve the business environment in Russia. Although the Russia laws mainly mirror the U.S. laws, they present a more extended list of terms concerning the insider information. I believe the legislative perfection should be continued. Conclusions and Relevance. The study helps apply the findings to outline a new legislative regulation or amend the existing ones, add a new mention on the course of financial markets to students’ books, develop new methods for detecting and countering and improving the existing ones. If all parties to insider relationships use the findings, they will prevent insider trading crimes in financial markets and (or) reduce the negative impact of such crimes on the parties.

Analysts' Information Acquisition and Stock Price Synchronicity: A Regulatory Perspective from China

2018 ◽  
Vol 33 (1) ◽  
pp. 153-179 ◽  
Author(s):  
Haiyan Jiang ◽  
Donghua Zhou ◽  
Joseph H. Zhang
Keyword(s):  
Insider Trading ◽  
Private Information ◽  
Stock Prices ◽  
Information Acquisition ◽  
Stock Price ◽  
Specific Information ◽  
Stock Price Synchronicity ◽  
Playing Field ◽  
Information Advantage ◽  
Private Information Acquisition

SYNOPSIS Against the backdrop of the Chinese Directive 40 (China's Reg FD) issued in 2007 as an attempt to curb insider trading and to level the information playing field, this study investigates whether analysts' private information acquisition influences the extent to which firm-specific information is impounded into stock prices, i.e., stock price synchronicity, and how the restrictions on selective disclosures imposed by Directive 40 have shaped the relationship between analyst information acquisition and synchronicity. Using a pre-Directive 40 sample, we show that synchronicity is negatively related to analysts' private information acquisition, which provides support for the “information advantage” argument of analysts' information production. However, the ability of analysts' private information acquisition in improving firm-specific information incorporated into stock price is mitigated post-Directive 40 due to a restriction on selective disclosures and/or private communication. Moreover, we find that this regulatory impact varies for firms being followed by affiliated analysts versus non-affiliated analysts. JEL Classifications: G14; G15; G17; G18.

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