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published_or_final_version / Business / Master / Master of Philosophy

We investigate whether Swedish insiders use an information advantage on future goodwill impairments to engage in net selling activity prior to public announcement. We further hypothesize greater insider net selling in impairment firms with a higher degree of goodwill in their balance sheets and in impairment firms in less transparent information environments. The insider trading is traced two years prior to the announcement of goodwill impairments in a sample between 2004-2012. Univariate and multivariate analyses are performed, comparing impairment firms with non-impairment firms. The results indicate that impairment firms engage in abnormal net selling up to six months prior to the announcement date. In addition, impairment firms with a higher degree of goodwill and with higher transparency are net selling to a higher extent up to six months prior to announcement date, although these findings only provide moderate predicting values. No significant results are discovered earlier than six months prior to announcement. These findings are incongruent with previous research.

No description available.

The purposes of this thesis are threefold: (1) to investigate the incidence of insider trading in China; (2) to critically examine the regulation of insider trading in China within the Chinese context; and (3) to set out reform proposals. At present, insider trading is a very serious issue in China as it presents a major obstacle to the development of China???s securities market. This thesis is therefore of both theoretical and practical significance. Based on both theoretical arguments and empirical findings, this thesis investigates the extent of insider trading in China, explains why insider trading occurs in China, and examines the harmful and allegedly beneficial effects of insider trading. Insider trading is found to be widespread and widely considered to be harmful in China. This accounts for the fact that China has shown a great willingness to follow the international trend to regulate insider trading. Indeed, with the benefit of overseas experience, China has made a remarkable achievement in establishing its insider trading regulatory regime within a relatively short period of time. Despite this, there are a number of major problems with this regulatory regime, mainly due to the adoption of foreign ideas without due criticism. This is illustrated by various loopholes found in the definition of what is an ???insider???, which are related to confusion over underlying theories of insider trading liability. The thesis conducts an indepth analysis of these theories on a comparative law basis, recommending that the equality of access theory and the Australian ???information connection??? only approach are better suited to China. The thesis also examines other basic elements of insider trading, including the concept of materiality, the issue of when information becomes public, and the subjective elements of insider trading. Furthermore, a detailed discussion is carried out concerning the issue of private civil liability for insider trading. It is submitted that the combination of the nondisclosure-period-traders approach and well-designed damage caps can best ensure that private actions serve as a necessary and appropriate force in the enforcement of insider trading law.

Diss. Stockholm : Stockholms universitet, 2006.

Bakgrund: Insiderhandel kan både vara en laglig och olaglig finansiell akt. Denna studie grundar sig på individers beslutsfattande gällande insiderhandel. Insiderhandel är olagligt när någon använder sig av icke offentlig information. Denna information används för att få en orättvis position på marknaden då en individ har kännedom om en framtida händelse som kommer att påverka aktiekursen. Tidigare fall och studier pekar på att beroende på hur insiderinformationen blir presenterad för individen har en stor påverkan på hur pass benägen individen är att utföra insiderhandel. Denna information delas upp i två kategorier, tipsad information och direkt kunskap. Syfte: Studiens syfte är att öka förståelse till vad som gör individer benägna att utföra insiderhandel. Metod: Studien använder sig av enkäter för att samla in data som sedan analyseras genom statistiska metoder för att finna korrelationer, sannolikhet och skillnader. Resultat: Individer är mer benägna att utföra insiderhandel via tips jämfört med direkt kunskap. Gruppen studenter var generellt mer riskbenägen att utföra insiderhandel jämfört med gruppen revisorer. Det fanns en korrelation mellan att utföra insiderhandel och skuldkänslor samt hur cynisk en individ är. Revisorer var mer benägna att utföra insiderhandel för att täcka en förlust jämfört med att göra vinst. / Background: Insider trading can both be a legal and an illegal act. This study is based on the individuals decision-making when it comes to insider trading. Insider trading is illegal the moment an individual decides to use non-public information for its own gain. This information is used to achieve an unfair position on the market, because and individual is aware of a future event that will affect the stock price. Earlier cases and studies indicate that depending on how the insider information is presented to the individual, it has a great influence on how badly the individual is to commit an insider trade. This information is divided into two categories, tipping and direct knowledge. Purpose: The purpose of this study is to create an understanding to what may cause insider trading. Method: The study used questionnaire to get the data to answer its questions. The data was used to see if there are correlations, probabilities and differences. Results: The results show that individuals are more inclined to do insider trading through tipping compared to direct knowledge. Students were generally more willing to do insider trading in comparison to accountants. There was a correlation between guilt and cynism against probability of insider trading. Accountants were more willing to do insider trading to save their assets in comparison to gain new assets through the stock market.

No description available.

I study how insider trading interacts with the political economy, regulators, and other corporate governance mechanisms. In the first section, I examine the impact of insider trading restriction enforcement on firm innovation. U. S. Securities and Exchange Commission enforcement actions are intended to protect investors and limit expropriation by firm insiders, but enforcement could impact insiders’ incentives to contribute to value enhancing activities. Therefore, I explore how corporate innovation and performance respond to insider trading restrictions imposed by firms and regulators. Using manually collected data on SEC indictments against corporate insiders, I document more innovative activity following external insider trading restrictions. External restrictions are also followed by higher corporate investment, capital access, and operating performance. Similarly, internal blackout restrictions to insider trading are also linked to more patents. SEC and congressional rule changes serve as quasi-natural experiments resulting in shocks in enforcement and indictments for identification and inference. Overall, the results suggest insider trading restrictions and enforcement actions impact subsequent firm activities and managerial decisions by protecting outside investment, resulting in more investment and innovation. In the second section, I explore the relation between political uncertainty and insider trading. With political uncertainty elevated recently, I examine the role of political uncertainty among insiders. By measuring firm-specific political risk measured from conference calls, I observe insiders trade more actively during uncertain periods with trading volume and transaction value increasing alongside political uncertainty. The results are driven by non-routine insider transactions and purchases at firms with CEO duality and fewer insider trading restrictions. Next, I observe similar results when exploiting variation in election timing across states and alternative external measures. Moreover, I find evidence of informed insider trading by observing higher abnormal returns following insider trades amidst political uncertainty. Finally, I find political uncertainty is linked to lower bid-ask spreads and leverage but observe higher outstanding shares with more insider trading when experiencing positive political uncertainty, consistent with insiders informing markets and improving liquidity. Overall, these results suggest insiders purchase more actively and opportunistically amidst political uncertainty, improving market information quality, especially when internal governance is accommodating.

I document that a significant number of insiders violate SEC reporting requirements by filing transactions after the legally required deadline. Although these violations are straightforward for the SEC to detect, instances of reporting violations persist. Prior to Sarbanes-Oxley, 29% of open market transactions fell outside the required reporting window. Following the enactment of SOX, 8% of all transactions continue to violate the filing deadline. During the filing delay trades are unknown to outside market participants and earn significant abnormal returns. I show that almost a quarter of filing violations are made by insiders that egregiously violate the reporting requirement. This subgroup realizes significantly greater abnormal returns for purchases and sales leading up to the reporting date. Most filing violations take place during periods of high information asymmetry, and insiders privately earn significant abnormal returns. Collectively, these findings indicate that a subgroup of insiders extract information rent from private knowledge during windows of unreported trading. The SEC reacts to numerous insiders disregard this reporting requirement by charging a small percentage of the total violators for wrongdoing. I employ a unique data set of SEC cases brought against top managers who fail to meet the filing requirements. By comparing the trades in indictments to similar non-indicted transactions, I assess that the SEC pursues insiders that violate the reporting requirement egregiously and are a manager at larger firms. While the coverage of these actions is thin, it significantly deters insiders from filing late after the enforcement. In addition, firm insiders may trade on private information concerning forthcoming innovations. Before high-quality innovations become public knowledge, I find that insiders significantly increase their holdings in the firm. After a patent for a breakthrough innovation is granted, the firm realizes significant abnormal returns. By insider, I find that members of the Corporate Suite increase their holdings around the application date and are the only insiders that earn significant abnormal returns following the grant date. These results suggest that key insiders can identify breakthrough patents ex-ante and utilize this information advantage before the innovation becomes public knowledge. These innovations translate into an increase in firm value.