Trading Behaviors of Insiders: A Speculative Trading Model and Empirical Evidence

Chuang-Yuang Lin, Chih-Wei Liu and Ming Way Li

Emerging Markets Finance and Trade, 2009, vol. 45, issue 5, 62-71

Abstract: Insider trading has been a widely discussed topic since the 1980s. Apart from discussing whether insider trading should exist, previous studies gradually began to study the factors affecting insider trades. This study establishes a market equilibrium model to identify factors that may affect the expected earnings and expected losses in insider trades. It also offers new evidence that factors, such as social factors, cost factors, moral factors, and bad news factors, may affect evaluation of the expected earnings and expected losses in insider trades. Our results have important implications for future studies developing a more pluralistic view of insider trading behavior.

Keywords: emerging financial market; emerging market; equilibrium models; insider; insider trading; moral factor; Taiwan stock market (search for similar items in EconPapers)
Date: 2009
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