Title

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

Additional URL

http://dx.doi.org/10.1016/j.jcorpfin.2014.07.005

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