Late Disclosure of Insider Trades: Who Does It and Why?

Millicent Chang () and Yilin Lim ()
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Millicent Chang: The University of Western Australia
Yilin Lim: The University of Western Australia

Journal of Business Ethics, 2016, vol. 133, issue 3, No 8, 519-531

Abstract: Abstract We attempt to understand the personal incentives that motivate corporate insiders to engage in unethical behavior such as delayed trade disclosure. Delayed disclosure affects corporate transparency and other shareholders in the firm potentially suffer investment losses because they are unaware of insiders’ activities. Using archival data from the 300 largest Australian firms between 2007 and 2011, the results show that risk factors such as insider age and tenure and wealth effects in the form of insider shareholdings affect the likelihood of delayed reporting. Governance positions such as committee membership mitigate this behavior. Our study highlights the importance of considering individual insider’s wealth and risk factors. The self-monitoring role of governance positions is also indicative of the effectiveness of internal corporate governance in the prevention of illegal insider behavior.

Keywords: Insider trading; Delayed trade disclosure; Risk; Wealth; Governance (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s10551-014-2413-3

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