A Comparative Empirical Investigation of Agency and Market Theories of Insider Trading

Laura Beny
Additional contact information
Laura Beny: University of Michigan

University of Michigan John M. Olin Center for Law & Economics Working Paper Series from University of Michigan John M. Olin Center for Law & Economics

Abstract: The paper summarizes various agency cost and market theories of insider trading propounded over the course of the perennial law and economics debate over insider trading. The paper then suggests three testable hypotheses regarding the relationship between insider trading laws and several measures of financial performance. Using international data and alternative regression specifications, the paper finds that more stringent insider trading laws and enforcement are generally associated with greater ownership dispersion, greater stock price accuracy and greater stock market liquidity. This set of findings provides empirical support to theoretical arguments in favor of more stringent insider trading legislation and enforcement.

New Economics Papers: this item is included in nep-fin, nep-fmk, nep-law and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://law.bepress.com/cgi/viewcontent.cgi?article=1003&context=umichlwps (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bep:uomlwp:umichlwps-1003

Access Statistics for this paper

More papers in University of Michigan John M. Olin Center for Law & Economics Working Paper Series from University of Michigan John M. Olin Center for Law & Economics
Bibliographic data for series maintained by Christopher F. Baum ().