Essays On Insider Trading

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Three Essays on Insider Trading

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Author : Haoyang Xiong
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (134 download)

Book Synopsis Three Essays on Insider Trading by : Haoyang Xiong

Download or read book Three Essays on Insider Trading written by Haoyang Xiong and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first essay we study whether and how personal off-the-job managerial indiscretions impact corporate insiders’ trading behavior. We find that executives accused of personal indiscretions earn significantly higher abnormal returns from their insider purchases and sales in a 15-day window around each trade. The results are robust to matched sample analyses. Further, insiders’ historical trading pattern or corporate culture has less explanatory power than personal attributes. We also document that exposure of these indiscretions to the public provides a disciplinary effect, as insider trading profits significantly drop following the announcement of an indiscretion, despite this drop being temporary. Corporate governance mechanisms, such as blackout policies, significantly reduce abnormal returns earned by indiscretion executives. In the second essay we find that individualistic countries regulate insider trading activities more intensely. The result is robust to controlling for alternative culture variables, additional controls, and instrumental variable analysis. We also document that individualism’s effect is magnified in democratic countries. In addition, we study the economic and financial consequences of individualism, insider trading regulation, and its enforcement. The analysis suggests that individualism and the enforcement of insider trading regulation promote financial development. Interaction effects reveal that individualism and insider trading regulation serve as complements to promote financial development. These findings contribute to the insider trading debate since regulation alone may not be the primary determinant of market efficiency. Combined, our results challenge prior works concluding that individualism is anti-regulation. In the last essay we explore the relation between insider trading regulation and the cost of equity in a country. Bhattacharya and Daouk (2002) conduct a comprehensive survey of 103 countries on whether insider trading law exists and has been enforced. They find that the enforcement of insider trading law, not the existence, can significantly reduce the cost of equity in a country. In this paper, we use an updated sample to reevaluate this topic and answer whether this relation still holds after adding 20 years of new data. Preliminary results show that countries with lighter insider trading regulation and countries that have enforced insider trading laws tend to experience lower cost of equity.

Essays on Insider Trading

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Author :
Publisher :
ISBN 13 :
Total Pages : 234 pages
Book Rating : 4.:/5 (935 download)

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Download or read book Essays on Insider Trading written by and published by . This book was released on 2015 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Three Essays on Insider Trading

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Author : Carla Evelyn Tighe
Publisher :
ISBN 13 :
Total Pages : 190 pages
Book Rating : 4.:/5 (214 download)

Book Synopsis Three Essays on Insider Trading by : Carla Evelyn Tighe

Download or read book Three Essays on Insider Trading written by Carla Evelyn Tighe and published by . This book was released on 1989 with total page 190 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation presents three theoretical essays on insider trading in financial markets. The first essay studies the workings of a cash market and a futures market under uncertainty. The model in this essay is an extension of work by Danthine (Journal of Economic Theory, 1978), in which perfectly competitive risk averse producers can sell their output on the cash market, at an uncertain price, or on a futures market at a guaranteed price. Risk averse speculators also trade in futures, having received noisy signals about eventual cash demand. In my first essay, the speculators are as uniformed as the competitive producers. A dominant firm, however, possesses information about cash demand. Each uniformed agent has individual beliefs about demand. In equilibrium, these beliefs remain heterogeneous. The inside information of the dominant firm is not necessarily revealed. The second and third essays study a financial market in which a single risky asset is traded. This work generalizes a paper by Kyle (Econometrica, 1985), in which a single insider knows the value of the risky asset perfectly. Uninformed traders (market makers) and nonrational noise traders also trade in the market. My second essay generalizes Kyle (1985) to allow for a finite number of noncolluding insiders to trade. As the number of insiders increases, insider profits--both individual and for the group as a whole--decrease, and more of the inside knowledge is incorporated into the market-clearing price. My third essay studies two noncolluding insiders. These insiders, however, do not necessarily know the precise value of the risky asset. In the first section of this essay, one insider has perfect information, while the other receives a noisy signal. In the second section, both insiders receive noisy signals. The results in these extensions of the model depend upon how informative the signals are. If the variance of each signal approaches infinity, the signal is virtually useless, and the insiders will not trade. Less noisy signals provide results comparable to the perfect information case of the second essay.

Insider Trading at the Turn of the Century

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Author : Semih Tartaroglu
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (61 download)

Book Synopsis Insider Trading at the Turn of the Century by : Semih Tartaroglu

Download or read book Insider Trading at the Turn of the Century written by Semih Tartaroglu and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Insider trading may convey information to the market and promote accurate pricing of stocks. In this dissertation, I investigate insider trading at the turn of the century. In the first essay, I investigate insider trading activity in technology stocks during the high price - high volatility period of the late 1990s. I document that insiders of technology firms were heavy sellers during the ten month pre-peak period in which stock prices more than doubled. The technology stocks that were sold by insiders more extensively in the pre-peak period had lower returns in the post-peak period. I furthermore investigate the relation between the net order flows (buyer initiated minus seller initiated trades) and abnormal insider trading activity. I document that the net order flow is positively related to abnormal insider trading activity. However, this positive relation becomes weaker in the peak period; which implies less price discovery through insider trading during the rise of technology stock prices. In the second essay, I document that disclosure requirements significantly affect insider trading behavior. The Sarbanes-Oxley Act of 2002 requires expedited and on-line disclosure of insider transactions. This increase in the visibility of insider trading reduces informational advantage of insiders and increases the likelihood of facing legal sanctions for insiders. I document that insider purchases significantly declined after the Sarbanes- Oxley Act. In addition, the incidences of insider purchases (sales) prior to positive (negative) earnings surprises declined after the Act. Finally, I document that the earnings announcements become more informative after the Act, which is consistent with less price discovery through insider trading prior to earnings announcements. However, the evidence that the decline in insider trading contributes to more informative earnings announcements is pronounced for insider purchases but not for insider sales.

Essays on Insider Trading

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Author : Valeriya Vitalyevna Posylnaya
Publisher :
ISBN 13 :
Total Pages : 142 pages
Book Rating : 4.:/5 (111 download)

Book Synopsis Essays on Insider Trading by : Valeriya Vitalyevna Posylnaya

Download or read book Essays on Insider Trading written by Valeriya Vitalyevna Posylnaya and published by . This book was released on 2018 with total page 142 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first essay explores relations between political affiliations and illegal insider trading. Assessing illegal insider trading is challenging due to the nature of the activity. Researchers observe and evaluate only the detected portion of illegal trading, not all illegal transactions. This presents a problem when using traditional empirical techniques to investigate such activity. In our analysis we employ a bivariate probit model that takes into account the partial observability nature of insider trading and provides estimates for the determinants of both the commission and the detection of illegal insider trading. Among our findings, most notable is the influence of the SEC's political structure on insider trading detection. We show that the political party affiliation within the SEC, past indictments by the SEC, and SEC budget play a crucial role in determining current prosecution. Past SEC indictments significantly decrease the likelihood to engage in illegal insider trading as well. Essay two investigates insider trading returns by corporate insiders in light of their firms' lobbying activities. Lobbying is a channel firms often use to influence regulatory change. Firms also use lobbying to obtain information on upcoming legislative and regulatory changes that are significant to the firms' future. Establishing and maintaining these political connections provides informational advantage not only to the firms engaged in lobbying but also to the insiders of these firms who receive an opportunity to base their trading decision on this potentially valuable information. Using data on firm lobbying activities, we provide evidence of an informational advantage acquired by corporate insiders of firms that develop these connections with policymakers. We find that insiders of lobbying firms gain additional return of 138 (156) basis points on their buys (sells) trades relative to transactions placed by insiders of firms that are not engaged in lobbying activities. We also document that the role of establishing and fostering lobbying contacts and the amounts spent on lobbying differ with type of insider transactions and length of investment horizons. The focus of the third essay is the impact of actual trading on material non-public information on firms' securities. Finance and law scholars present theoretical arguments both in favor of and against trading on material non-public information. However, investigating empirically the actual impact of insider trading on the insider's firm poses significant challenges due to the lack of precision in identifying from publically available data trades that are based on private information. In this study, we utilize Securities Exchange Commission (SEC) indictments of illegal insider trading to examine the impact of illegal insider trading on the firm. We provide evidence suggesting that illegal insider trading increases stock market liquidity for the involved firms. Our results imply that bid-ask spread following transactions based on private information is narrower for long-run windows. However, we also find results implying that informed trading is associated with reduced liquidity, when estimated with Amihud Illiquidity proxy, reflecting price impact of trades based on private information.

Essays on Insider Trading and Securities Regulation

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Author : C. E. F. Rickett
Publisher : Brooker's Legal Information
ISBN 13 : 9780864722508
Total Pages : 276 pages
Book Rating : 4.7/5 (225 download)

Book Synopsis Essays on Insider Trading and Securities Regulation by : C. E. F. Rickett

Download or read book Essays on Insider Trading and Securities Regulation written by C. E. F. Rickett and published by Brooker's Legal Information. This book was released on 1997-01-01 with total page 276 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Three Essays on Financial Intermediary and Insider Trading

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Author : Xiaoqiong Wang
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (14 download)

Book Synopsis Three Essays on Financial Intermediary and Insider Trading by : Xiaoqiong Wang

Download or read book Three Essays on Financial Intermediary and Insider Trading written by Xiaoqiong Wang and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Two Essays on Insider Trading

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Author : Thuy H. Simpson
Publisher :
ISBN 13 : 9781303030857
Total Pages : 174 pages
Book Rating : 4.0/5 (38 download)

Book Synopsis Two Essays on Insider Trading by : Thuy H. Simpson

Download or read book Two Essays on Insider Trading written by Thuy H. Simpson and published by . This book was released on 2013 with total page 174 pages. Available in PDF, EPUB and Kindle. Book excerpt: Numerous studies to date have addressed short-term returns earned by insiders with mixed results. Longer-term performance of executives and directors, however, has not been addressed in the literature. In essay one, I investigate whether insiders actually earn abnormal returns in the long-run by deriving a more accurate and comprehensive measure of insiders' realized returns. Key results from insiders' dollar-weighted returns, which explicitly account for capital flow timing and magnitude from all SEC-reported insider transactions, show that insiders fail to earn abnormal returns in their overall portfolio during their tenure with the firm. In essay two, I examine option exercise behaviors that have not been addressed in prior literature. This includes an analysis of exercised options and available-but-unexercised options, a comparison between multiple and single exercises, as well as a comparison between fractional and full exercises. I also investigate factors associated with the decision to exercise, the decision to exercise multiple options, and the decision to exercise the entire option grants at each exercise date.

Dissecting Fortune and Woe from Insider Trading

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Author : Mohammad Riaz Uddin
Publisher :
ISBN 13 :
Total Pages : 88 pages
Book Rating : 4.:/5 (132 download)

Book Synopsis Dissecting Fortune and Woe from Insider Trading by : Mohammad Riaz Uddin

Download or read book Dissecting Fortune and Woe from Insider Trading written by Mohammad Riaz Uddin and published by . This book was released on 2019 with total page 88 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation examines three unanswered research questions that contribute to the understanding of informational role of corporate insiders for financial markets. In the first chapter, I examine whether celebrity or star status of a chief executive officer(CEO) affects the informativeness of his trades. In the second chapter, I test the relationship between aggregate insider trades and corporate bond rating. In the final chapter, I investigate the insider trading behavior of narcissistic CEOs. Overall, my findings support the notion that equity trades executed by corporate insiders possess useful information that could be potentially exploited by the noise traders.

Essays on Insider Trading, Innovation, and Political Economy

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Author : Jiawei Chen
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (134 download)

Book Synopsis Essays on Insider Trading, Innovation, and Political Economy by : Jiawei Chen

Download or read book Essays on Insider Trading, Innovation, and Political Economy written by Jiawei Chen and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: I study how insider trading interacts with the political economy, regulators, and other corporate governance mechanisms. In the first section, I examine the impact of insider trading restriction enforcement on firm innovation. U. S. Securities and Exchange Commission enforcement actions are intended to protect investors and limit expropriation by firm insiders, but enforcement could impact insiders’ incentives to contribute to value enhancing activities. Therefore, I explore how corporate innovation and performance respond to insider trading restrictions imposed by firms and regulators. Using manually collected data on SEC indictments against corporate insiders, I document more innovative activity following external insider trading restrictions. External restrictions are also followed by higher corporate investment, capital access, and operating performance. Similarly, internal blackout restrictions to insider trading are also linked to more patents. SEC and congressional rule changes serve as quasi-natural experiments resulting in shocks in enforcement and indictments for identification and inference. Overall, the results suggest insider trading restrictions and enforcement actions impact subsequent firm activities and managerial decisions by protecting outside investment, resulting in more investment and innovation. In the second section, I explore the relation between political uncertainty and insider trading. With political uncertainty elevated recently, I examine the role of political uncertainty among insiders. By measuring firm-specific political risk measured from conference calls, I observe insiders trade more actively during uncertain periods with trading volume and transaction value increasing alongside political uncertainty. The results are driven by non-routine insider transactions and purchases at firms with CEO duality and fewer insider trading restrictions. Next, I observe similar results when exploiting variation in election timing across states and alternative external measures. Moreover, I find evidence of informed insider trading by observing higher abnormal returns following insider trades amidst political uncertainty. Finally, I find political uncertainty is linked to lower bid-ask spreads and leverage but observe higher outstanding shares with more insider trading when experiencing positive political uncertainty, consistent with insiders informing markets and improving liquidity. Overall, these results suggest insiders purchase more actively and opportunistically amidst political uncertainty, improving market information quality, especially when internal governance is accommodating.

Two Essays on Stock Repurchases and Insider Trading

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Author :
Publisher :
ISBN 13 :
Total Pages : 222 pages
Book Rating : 4.:/5 (659 download)

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Download or read book Two Essays on Stock Repurchases and Insider Trading written by and published by . This book was released on 2009 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt: ABSTRACTThe objective of my two essays together is to examine whether the trades made by the insiders prior to open market repurchase (OMR) announcements contain information that can be used to identify the repurchases that are motivated by undervaluation. The existing literature on shares repurchases suggests that while undervaluation has been a dominant motive behind repurchases for past few decades, identifying these undervalued firms still remains a challenge. The book-to-market ratio is commonly used as a proxy for mispricing; however, its ability to identify undervalued repurchasing firms has recently come into doubt (Chan et al., 2004). Instead, I propose using proxies based on insider trading to identify the undervalued repurchasing firms. In the first essay, I document a relation between insider trading and both the short- and long-run stock returns of open market repurchasing firms. My findings suggest that the personal trades made by insiders prior to the OMR announcements contain information that can be used to identify undervalued repurchasing firms. I use various measures of insider trading and show that firms with high (low) insider buying (selling) prior to repurchase announcements earn abnormal stock returns in both the short- and long-run. I also find a positive (negative) relation between insider buying (selling) and the actual repurchasing activity of the firms. In my second essay, I further test whether the trades made by insiders prior to OMR announcements contain information that can be used to identify the repurchases that are motivated by undervaluation by examining the post-announcement operating performance. I find a relation between insider trading and the post-announcement operating performance for the OMR firms that is consistent with the hypothesis that insiders' trades prior to OMR announcements are informative. Specifically, I find that firms with high insider buying prior to the OMR announcements outperform their corresponding control firms, whereas, firms with low insider buying do not. In addition, I test for a relation between insider trading and (a) the accruals management around OMR announcements, and (b) the market reaction to the earnings announcements made by the OMR firms. I find a weak evidence of insiders timing their trades along with accruals management. However, the market reaction to earnings announcements made by the OMR firms does not seem to vary with level of insider trading. Overall, the evidence is consistent with insiders of repurchasing firms knowing when their stocks are undervalued and they timing both their personal and firm level trades accordingly.

Three essays in finance

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Author : Leslie Ann Jeng
Publisher :
ISBN 13 :
Total Pages : 131 pages
Book Rating : 4.:/5 (414 download)

Book Synopsis Three essays in finance by : Leslie Ann Jeng

Download or read book Three essays in finance written by Leslie Ann Jeng and published by . This book was released on 1998 with total page 131 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Essays on Insider Trading and Its Regulation and the Agency Costs of Free Cash Flow

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Author : Ranga Narayanan
Publisher :
ISBN 13 :
Total Pages : 204 pages
Book Rating : 4.:/5 (332 download)

Book Synopsis Essays on Insider Trading and Its Regulation and the Agency Costs of Free Cash Flow by : Ranga Narayanan

Download or read book Essays on Insider Trading and Its Regulation and the Agency Costs of Free Cash Flow written by Ranga Narayanan and published by . This book was released on 1992 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Two Essays on Stock Repurchases and Insider Trading

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Author : Shrikant Prabhakar Jategaonkar
Publisher :
ISBN 13 :
Total Pages : 222 pages
Book Rating : 4.:/5 (659 download)

Book Synopsis Two Essays on Stock Repurchases and Insider Trading by : Shrikant Prabhakar Jategaonkar

Download or read book Two Essays on Stock Repurchases and Insider Trading written by Shrikant Prabhakar Jategaonkar and published by . This book was released on 2009 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt: ABSTRACTThe objective of my two essays together is to examine whether the trades made by the insiders prior to open market repurchase (OMR) announcements contain information that can be used to identify the repurchases that are motivated by undervaluation. The existing literature on shares repurchases suggests that while undervaluation has been a dominant motive behind repurchases for past few decades, identifying these undervalued firms still remains a challenge. The book-to-market ratio is commonly used as a proxy for mispricing; however, its ability to identify undervalued repurchasing firms has recently come into doubt (Chan et al., 2004). Instead, I propose using proxies based on insider trading to identify the undervalued repurchasing firms. In the first essay, I document a relation between insider trading and both the short- and long-run stock returns of open market repurchasing firms. My findings suggest that the personal trades made by insiders prior to the OMR announcements contain information that can be used to identify undervalued repurchasing firms. I use various measures of insider trading and show that firms with high (low) insider buying (selling) prior to repurchase announcements earn abnormal stock returns in both the short- and long-run. I also find a positive (negative) relation between insider buying (selling) and the actual repurchasing activity of the firms. In my second essay, I further test whether the trades made by insiders prior to OMR announcements contain information that can be used to identify the repurchases that are motivated by undervaluation by examining the post-announcement operating performance. I find a relation between insider trading and the post-announcement operating performance for the OMR firms that is consistent with the hypothesis that insiders' trades prior to OMR announcements are informative. Specifically, I find that firms with high insider buying prior to the OMR announcements outperform their corresponding control firms, whereas, firms with low insider buying do not. In addition, I test for a relation between insider trading and (a) the accruals management around OMR announcements, and (b) the market reaction to the earnings announcements made by the OMR firms. I find a weak evidence of insiders timing their trades along with accruals management. However, the market reaction to earnings announcements made by the OMR firms does not seem to vary with level of insider trading. Overall, the evidence is consistent with insiders of repurchasing firms knowing when their stocks are undervalued and they timing both their personal and firm level trades accordingly.

Essays on empirical asset pricing and insider trading

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Author : Chao Jiang
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (14 download)

Book Synopsis Essays on empirical asset pricing and insider trading by : Chao Jiang

Download or read book Essays on empirical asset pricing and insider trading written by Chao Jiang and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Essays on Comparative Insider Trading Law, Finance and Political Economy

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Author : Laura Nyantung Beny
Publisher :
ISBN 13 :
Total Pages : 226 pages
Book Rating : 4.:/5 (249 download)

Book Synopsis Essays on Comparative Insider Trading Law, Finance and Political Economy by : Laura Nyantung Beny

Download or read book Essays on Comparative Insider Trading Law, Finance and Political Economy written by Laura Nyantung Beny and published by . This book was released on 2002 with total page 226 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Two Essays on Insider Trading and Option Grants Around the Filing of Influential Patents

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Author : Liu Pan
Publisher :
ISBN 13 :
Total Pages : 206 pages
Book Rating : 4.:/5 (89 download)

Book Synopsis Two Essays on Insider Trading and Option Grants Around the Filing of Influential Patents by : Liu Pan

Download or read book Two Essays on Insider Trading and Option Grants Around the Filing of Influential Patents written by Liu Pan and published by . This book was released on 2014 with total page 206 pages. Available in PDF, EPUB and Kindle. Book excerpt: