Insider trading footprints: An empirical look at detected cases in Australia

Dean Katselas and Sarah Osborne

International Review of Finance, 2025, vol. 25, issue 2

Abstract: This paper examines illegal insider trading in Australian equity markets, focusing on whether such trades leave observable footprints in prices and returns. We compile a hand‐collected dataset of identified insider‐trading incidents. Using an event‐study design, we find minimal footprints for earnings announcements and a small negative price effect for M&A deals. A detection‐controlled estimation (DCE) model reveals that while 17.79% of M&A announcements likely involve insider trading, regulators detect only 29.59%. Thus, relying solely on detected trades understates insider trading's broader impact. Our results highlight stealthy trading tactics and the need for enhanced surveillance to combat hidden illegal trades.

Date: 2025
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