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Profitability of insider trading in Europe: A performance evaluation approach

Bartosz Gebka (), Adriana Korczak, Piotr Korczak and Jędrzej Traczykowski

Journal of Empirical Finance, 2017, vol. 44, issue C, 66-90

Abstract: We use the largest cross-country sample of reported share transactions by corporate insiders to date to establish that insiders in the majority of European countries do not make statistically significant abnormal trading profits. This finding stands in contrast to the earlier evidence from the U.S. The result holds across subsamples of firms with different characteristics. Furthermore, the introduction of the European Union Market Abuse Directive (MAD) had a mixed impact on the frequency and volume of insider trading across countries but generally did not affect profits of insider-mimicking portfolios. We build on the heterogeneity of our sample countries to show that several country-level regulatory, economic and cultural factors are linked with the level of insider profits which can explain why the profitability of insider trading differs starkly across countries.

Keywords: Insider trading; Portfolio; Profits; Europe; MAD (search for similar items in EconPapers)
JEL-codes: G11 G14 G18 (search for similar items in EconPapers)
Date: 2017
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Journal of Empirical Finance is currently edited by R. T. Baillie, F. C. Palm, Th. J. Vermaelen and C. C. P. Wolff

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