Do voluntary corporate restrictions on insider trading eliminate informed insider trading
Publication Type
Journal Article
Publication Date
12-2014
Abstract
We investigate whether voluntary corporate restrictions on insider trading effectively prevent insiders from exploiting their private information. Our results show that insiders of firms with seeming restrictions on insider trading continue to take advantage of positive private information while being more cautious when exploiting negative private information. The results suggest that insiders continue to exploit their informational advantages in a way that minimizes their legal risk. We also find that the degree of information asymmetry is significantly lower in firms with restriction policies and that corporate governance significantly affects firms' decisions to adopt these policies.
Keywords
Corporate governance, Information asymmetry, Insider trading, Profitability of insider trading, Voluntary corporate restrictions
Discipline
Corporate Finance
Research Areas
Finance
Publication
Journal of Corporate Finance
Volume
29
First Page
158
Last Page
178
ISSN
0929-1199
Identifier
10.1016/j.jcorpfin.2014.07.005
Publisher
Elsevier
Citation
LEE, Inmoo; LEMMON, Michael; LI, Yan; and SEQUEIRA, J. M..
Do voluntary corporate restrictions on insider trading eliminate informed insider trading. (2014). Journal of Corporate Finance. 29, 158-178.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5032
Additional URL
https://doi.org/10.1016/j.jcorpfin.2014.07.005