Information asymmetry and the information content of insider trades: Evidence from the Indian stock market

Yogesh Chauhan, K. Kiran Kumar and Chakrapani Chaturvedula

Journal of Multinational Financial Management, 2016, vol. 34, issue C, 65-79

Abstract: This paper investigates a proprietary dataset of insider trades for Indian listed firms, where controlling ownership and business groups dominate. We show that the information content of insider trading is an inverted U-shaped function of controlling ownership. Further, we find that the information content of insider trading is lower when firms are affiliated with a business group. We also show that information production depends on the degree of information asymmetry between insiders and outsiders. Finally, we find that insider trades that occur prior to an earnings announcement have a larger impact on stock prices.

Keywords: Insider trading; Information asymmetry; Emerging market; Information content; Controlling ownership; Business group; Market efficiency (search for similar items in EconPapers)
JEL-codes: G12 G14 G38 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:34:y:2016:i:c:p:65-79

DOI: 10.1016/j.mulfin.2015.12.003

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