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The new insider trading provisionsSpeedie, Miles Stuart 01 1900 (has links)
It is unfair to the investing public and detrimental to the
interests of the security markets for a person to trade on the
basis of inside information. In this short dissertation, the
laws regulating insider trading in South Africa prior to the
current legislative provisions are briefly discussed. It is
found that the old provisions were inadequate in deterring and
punishing insider trading activities. The current legislative
provisions are analysed in detail. It becomes clear that whilst
the current provisions are a substantial improvement on their
predecessor, certain aspects need to be reconsidered. These
include the widening of their scope to include trading in all
kinds of derivatives; the reformulation of the statutory civil
action and the empowerment of the securities regulation panel
to bring a civil action against insider traders. / Private Law / LL.M.
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Two essays on corporate financeLian, Jie, 1977- 03 September 2010 (has links)
This dissertation consists of two essays on corporate finance. Essay one examines whether corporate governance affects firm performance after capital investments. I find that among firms with weak corporate governance, those with high abnormal capital investments have significantly lower stock performance than those with low abnormal capital investments. In addition, a significant portion of the difference in abnormal stock performance between the two subgroups occurs around earnings announcements. In contrast, the level of abnormal capital investments is not related to subsequent stock performance or earnings announcement returns at firms with strong corporate governance. These findings indicate that corporate governance structure enhances firm value by mitigating the over-investment problem.
Essay two examines how insider trading activity prior to seasoned equity offerings (SEOs) is related to subsequent investment, operating, and financing decisions of the issuer. I find that SEO firms with more abnormal insider sales issue more seasoned equity, hold more cash and increase dividend payouts more. They also perform more poorly. Following the SEO, these firms also issue less equity and the effects of the SEO on their capital structures gradually reverses. These findings suggest that SEO firms with more abnormal insider sales are more likely to have overpriced stock, while those with less abnormal insider sales are more likely to have good investment opportunities. Insider trading activity prior to the SEO provides valuable information about the firm’s incentives to issue seasoned equity and help to predict the real activities of the issuer following the SEO. / text
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Two Essays on An Examination of Life Cycle Effects and Firm PoliciesUnknown Date (has links)
In Essay 1, I investigate the impact of corporate life cycle dynamics on the
observed negative association between asset growth and stock returns in the crosssection.
I find that the asset growth effect on average exists across some life cycle stages
measured using cohorts. However, controlling for certain variables associated with the
theoretical explanations, I find there is no relation between asset growth and returns. I
argue this evidence is consistent with an agency-based explanation of the asset growth
effect. Furthermore, a decomposition of the drivers of the effect shows that different
components of assets (i.e. working capital and financing) drive asset growth effect at
different life cycle stages. From a decomposition analyses, results show that in the
youngest firms (cohort 1), asset growth effect is mostly driven by both operating liability
and stock financing on one side (financing) and noncash current assets, PPE, and growth
in other assets (for working capital) while cohort 3’s drivers appear to be stock issuances, together with noncash current assets, which I conclude offer further support for
agency issues.
In Essay 2, I examine how firms’ life cycle affect insider trading behavior, profits
surrounding trades, price informativeness, and financing constraints. I argue that if firms’
policies and characteristics change over time as shown in lifecycle literature, then from
firm characteristics that motivate insider-trading behavior, one should observe some
differences across varying life cycle stages measured using age cohorts. I find that
insiders are net sellers at all life cycle stages of a firm. Furthermore, insiders tend to trade
more in younger firms than in older firms even though they have fewer numbers of
insiders trading. Trading characteristics are generally statistically significant across
cohorts. Overall, insiders appear to predict the correct direction for positive wealth
generation when trading. Specifically, at all lifecycle stages, they appear to sell before
negative CARs, and buy during periods associated with negative CARs that lead to
positive CARs days after insider transactions. The findings on price informativeness
suggest that in general insider purchases enhance price informativeness for firms at
different lifecycle stages, however, this finding holds only for cohort 4 (oldest firms) in
the case of insider sales. The implication of this finding is that regulation should be more
lax towards purchases as compared to sales for firms, except for sales in firms that are
older. Lastly, insider trades are linked with positive investment-cash flow sensitivities for
both insider purchases and insider sales, which generally increase monotonically across
cohorts. This finding is robust to using GMM approach. / Includes bibliography. / Dissertation (Ph.D.)--Florida Atlantic University, 2018. / FAU Electronic Theses and Dissertations Collection
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Heterogeneous investors in stock market. / CUHK electronic theses & dissertations collection / ProQuest dissertations and thesesJanuary 2002 (has links)
In the second part of the thesis, we investigate whether ownership structure has influence to long-term stock return. We use a risk adjustment method to make it possible to compare stock return in different terms, therefore, we can use GMM method to estimate the influence of ownership structure in a panel sample set. We find that, insider ownership and institutional ownership are all significantly favorable to long-term stock return. However, the quarterly insider ownership change and quarterly institutional ownership change do not show significant influence. We also use a Fama-MacBeth approach to compare the results from GMM estimation and we find that the results are similar. / This thesis consists of two related parts. In the first part, we develop a method to extract insider ownership information from insider transaction reporting files and by combining it with quarterly institutions holding report data, we obtain quarterly ownership structure for most common stocks listed in CRSP tape. We use ownership structure and quarterly ownership change to analyze how insiders, large institutions and individual investors differ from each other in their holding preference to stock characteristics and trading behavior. We find that, these three kinds of investors have significant difference in holding preference to size, price, monthly turnover, previous 12-months return. They also show significant difference in trading behaviors. Basically, institutions are momentum trader, and are interested in "growth" stocks. Insiders are anti-momentum trader, they sell more when past return is higher and they more focus on "value" stocks. / Zhu, Honghui. / "September 2002." / Source: Dissertation Abstracts International, Volume: 64-11, Section: A, page: 4150. / Supervisors: Jia He; Xiaoqiang Cai. / Thesis (Ph.D.)--Chinese University of Hong Kong, 2002. / Includes bibliographical references (p. 94-101). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Electronic reproduction. Ann Arbor, MI : ProQuest dissertations and theses, [200-] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Abstracts in English and Chinese. / School code: 1307.
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Abnormal Returns around Lock-Up Expiration Date and the Explanatory Power of Insider Trading for Technology FirmsSavard, John 01 January 2019 (has links)
This paper examines the lockup expiration date event for technology firms post Global Financial Crisis to investigate the existence of abnormal returns around this date and determine the explanatory power that insider trading and the increase in available shares have on the abnormal return. Contributions to literature include using an updated sampling, targeting the technology industry, and constructing unique variables such as the dollar value of insider trades around the lockup expiration date. There exists statistically significant three-day cumulative abnormal returns of -1.33%. Firms with higher percentages of insiders who sell their positions tend to experience a further decrease in cumulative abnormal returns (CAR). The supply effect of these shares being opened to the market is not significant at the 95% confidence level. Thus, insider trading rather than increased supply accounts for variations in the abnormal returns across technology firms.
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Congressional Insider Trading: An Analysis of the Personal Common Stock Transactions of U.S. SenatorsYingling, Scott T 01 January 2011 (has links)
I have examined the common stock investments made by members of the U.S. Senate between 2006 and 2009. I find that the average stock portfolio in the Senate exhibits one and two year cumulative abnormal returns (CARs) of -0.15 % and 0.43%, respectively. This suggests that members of the Senate are not trading on insider knowledge as indicated by one previous researcher who calculated a one year CAR of 25%. However, my findings are in line with another previous researcher who found a one year CAR of about -2% and concluded that Congressmen are not trading on inside information. I also examine election-year trades made by senators who lose a reelection bid. This cashing out effect amounts to a CAR of 0.43% during the first year post loss, but after two years these trades exhibit a CAR of -0.03%. The cashing out group performs no better than the group as a whole, indicating that this group did not use their informational advantage to profit during the lame duck session.
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Behind the Scenes : Are Swedish Laws efficient in stopping insider trading?Keitsch, Sandra January 2011 (has links)
In the aftermath of the verdict of acquittal in “Sweden’s largest insider trading case” once again a debate concerning illegal insider trading has arisen and a lot of criticism is directed towards the laws. The purpose of this master´s thesis is to investigate the occurrence of insider trading and whether or not Swedish legislation has decreased the presence of insider trading on the Stockholm Stock Exchange. For this purpose the legal aspects and relevant arguments are presented and discussed. An event study is performed in order to see if profit warnings show evidence of insider trading on the Swedish stock exchange. The event study show statistically significant evidence of illegal insider trading in 21 out of 44 cases on the Stockholm stock exchange. There is no significant difference in insider trading between profit warnings and reversed profit warnings. The regression show evidence of that the law has had a small negative impact on insider trading in the sample which is surprising and that insider trading is industry correlated. The high frequency of insider trading shows evidence of that the laws are inefficient in stopping insider trading. Since it is clear that the law is seriously flawed in stopping insider trading and that insider trading actually may positively affect the market and its participants, it is argued that it is very questionable if the legislation is necessary and if insider trading should be prohibited at all.
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Insider trading at the turn of the century: two essaysTartaroglu, Semih -. 15 May 2009 (has links)
Insider trading may convey information to the market and promote accurate
pricing of stocks. In this dissertation, I investigate insider trading at the turn of the
century.
In the first essay, I investigate insider trading activity in technology stocks during
the high price - high volatility period of the late 1990s. I document that insiders of
technology firms were heavy sellers during the ten month pre-peak period in which stock
prices more than doubled. The technology stocks that were sold by insiders more
extensively in the pre-peak period had lower returns in the post-peak period. I
furthermore investigate the relation between the net order flows (buyer initiated minus
seller initiated trades) and abnormal insider trading activity. I document that the net
order flow is positively related to abnormal insider trading activity. However, this
positive relation becomes weaker in the peak period; which implies less price discovery
through insider trading during the rise of technology stock prices.
In the second essay, I document that disclosure requirements significantly affect
insider trading behavior. The Sarbanes-Oxley Act of 2002 requires expedited and on-line disclosure of insider transactions. This increase in the visibility of insider trading reduces
informational advantage of insiders and increases the likelihood of facing legal sanctions
for insiders. I document that insider purchases significantly declined after the Sarbanes-
Oxley Act. In addition, the incidences of insider purchases (sales) prior to positive
(negative) earnings surprises declined after the Act. Finally, I document that the earnings
announcements become more informative after the Act, which is consistent with less
price discovery through insider trading prior to earnings announcements. However, the
evidence that the decline in insider trading contributes to more informative earnings
announcements is pronounced for insider purchases but not for insider sales.
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Two Essays on Stock Repurchases and Insider TradingJategaonkar, Shrikant Prabhakar January 2009 (has links)
The objective of my two essays together is to examine whether the trades made by the insiders prior to open market repurchase (OMR) announcements contain information that can be used to identify the repurchases that are motivated by undervaluation. The existing literature on shares repurchases suggests that while undervaluation has been a dominant motive behind repurchases for past few decades, identifying these undervalued firms still remains a challenge. The book-to-market ratio is commonly used as a proxy for mispricing; however, its ability to identify undervalued repurchasing firms has recently come into doubt (Chan et al., 2004). Instead, I propose using proxies based on insider trading to identify the undervalued repurchasing firms.In the first essay, I document a relation between insider trading and both the short- and long-run stock returns of open market repurchasing firms. My findings suggest that the personal trades made by insiders prior to the OMR announcements contain information that can be used to identify undervalued repurchasing firms. I use various measures of insider trading and show that firms with high (low) insider buying (selling) prior to repurchase announcements earn abnormal stock returns in both the short- and long-run. I also find a positive (negative) relation between insider buying (selling) and the actual repurchasing activity of the firms.In my second essay, I further test whether the trades made by insiders prior to OMR announcements contain information that can be used to identify the repurchases that are motivated by undervaluation by examining the post-announcement operating performance. I find a relation between insider trading and the post-announcement operating performance for the OMR firms that is consistent with the hypothesis that insiders' trades prior to OMR announcements are informative. Specifically, I find that firms with high insider buying prior to the OMR announcements outperform their corresponding control firms, whereas, firms with low insider buying do not. In addition, I test for a relation between insider trading and (a) the accruals management around OMR announcements, and (b) the market reaction to the earnings announcements made by the OMR firms. I find a weak evidence of insiders timing their trades along with accruals management. However, the market reaction to earnings announcements made by the OMR firms does not seem to vary with level of insider trading. Overall, the evidence is consistent with insiders of repurchasing firms knowing when their stocks are undervalued and they timing both their personal and firm level trades accordingly.
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Essays on strategic trading, asymmetric information, and asset pricingPeterson, David John 05 1900 (has links)
This thesis presents three models of asset pricing involving non-competitive behavior and asymmetric
information. In the first model, a risk averse investor with private information about
dividends trades shares over an infinite time horizon with risk neutral uninformed agents. The
informed investor trades strategically in equilibrium. The second model also involves an infinite
time horizon, but all agents are risk averse and equally informed about dividends. Non-competitive
behavior is exogenously specified; price takers trade shares with a strategic investor
who accounts for the effects of her trades on the stock price. In this case, an endogenous information
asymmetry arises in equilibrium. Closed form equilibria are derived for both models and
implications for price dynamics are explored. While the first model constitutes a new extension
of the multiperiod Kyle model of insider trading, the second model generates more interesting
price dynamics. If the strategic investor manages a large mutual fund, significant risk premia
and price volatility may arise in equilibrium. In fact, if mutual fund participation is sufficiently
widespread, multiple equilibria may exist. The third model extends the multiperiod Kyle model
to a case where the insider observes a noisy signal of the stock's terminal liquidation value. An
equilibrium much like Kyle's is derived. Price tends toward value over time, and stock price
volatility depends on both the drift and volatility of the insider's private signal. Like the Kyle
model, the insider's trading activity leaves no detectable trace in trading volume, expected
returns, or price volatility.
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