This study provides a test of the market valuation impact of Securities and Exchange Commission (SEC) enforcement actions for foreign firms. I examine the SEC enforcement policy towards foreign firms under its jurisdiction. In contrast to Siegel (2005) who examines earlier years, I find that the SEC's current (post-2002) enforcement intensity is considerable and has increased dramatically by comparison. I construct a novel test using the burgeoning series SEC enforcement events as changes to the legal environment that circumvents the issues associated with firm-level exchange-listing events (e.g. self-selection and simultaneous changes to firm traits). The tests focus on stock returns of foreign firms not targeted by the SEC during event windows surrounding SEC announcements of enforcements against foreign firms. This isolates the effect of a changing enforcement environment. I find that when the SEC takes action against a foreign firm, non-target foreign firms experience positive stock returns. Returns are amplified for firms from weaker home legal environments, suggesting that the returns are due to a perceived increase in SEC scrutiny. Finally, consistent with the market adjusting to the new enforcement regime, the magnitude of non-target firm returns declines with each sequential SEC enforcement action. The overall results provide evidence that SEC oversight plays a significant role in increasing the value of foreign firms, which supports the legal bonding hypothesis discussed in prior literature.

<p dir="ltr">This paper examines the informational content of insider trades and the impact of the Sarbanes Oxley Act on the ability of outside investors to use this information. I find that while the new reporting requirement speeds up the incorporation of insiders’ information into the market, there still exists an opportunity for attentive outsiders. The studies also address how the increased market efficiency has affected the differences between insiders, such as top-level executives and the rest of insiders. I find that the Sarbanes Oxley Act has greatly leveled the playing field in terms of how outsiders perceive these groups. Further, I extend the analysis of identifying opportunistic insiders. I find that using 8K corporate events in addition to quarterly earnings announcements, we are able to more efficiently label insiders as opportunistic compared to previous studies. Finally, I extend the literature on institutional investors by analyzing the link between this group and insider activity. I show that the previous findings of institutional investors following insiders is being driven by a subset of institutions, and I find evidence to support important distinguishing characteristics of institutional investors indicating institutions should not be studied as a whole, but in groups.</p>

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Prior literature suggests that CEOs capitalize on their position within the hierarchy of all business executives, resulting in various – both positive and negative – firm outcomes. Using a novel data set on golf outings to measure the quality of a CEO's informal (vs. formal) network, as measured by the CEO's network centrality, this study examines whether well-connected CEOs generate private gains through insider trades. Results suggest that, among golfing CEOs, CEOs with higher quality informal networks generate significantly higher insider trading profits on sales of their firms' stock, consistent with more famous, powerful, and influential CEOs possessing superior information. The paper continues by delineating a channel through which private information flow to network participants by documenting significantly different golf patterns of CEOs during the two weeks before material firm events become public while showing that CEOs generate noticeably higher insider trading profits from stock trades executed during the two weeks following these golf outings. This study highlights a setting in which shareholders are at risk of wealth transfer and illustrates the potential limitations of regulation concerning insider trading.

Yes / This paper investigates the relation between insider trading and the likelihood of insolvency with a specific focus on the directors’ sale and purchase transactions preceding insolvency.We use a unique data set on directors’ dealings in 474 non-financial UK firms, of which 117 filed for insolvency, over the period 2000–2010.We show that the directors of insolvent firms increase their purchase transactions significantly as the insolvency approaches. The results also reveal a significant relation between three different measures of insider trading activity and the likelihood of insolvency, which is observed to be positive only during the last six-month trading period. The relation is negative for the earlier trading periods. While the earlier purchase transactions appear to be motivated by superior information held by insiders, the purchase trades closer to the insolvency date are possibly initiated by directors’ motives to influence the market’s perception of the firm in an attempt to avert or delay insolvency.

I analyze the relationship between insider trading outcomes and insiders' information environment within a network. While most existing studies rely on one dimension of commonality (e.g., personal ties, professional ties, geographic proximity) to construct the social network, I document the formation of the institutional investor groups (cliques) that exogenously connect firm-level insiders within the social network. Using difference-in-differences designs examining changes in clique size, I provide empirical evidence on the information dissemination channels within a network in which its members are quasi-randomly selected. Insider transactions in larger cliques exhibit lower abnormal trading profits, higher level of trading frequency, and larger amount of trade size, suggesting information dissemination is increasing in clique size. Then, I provide empirical evidence that the association between the value of information and the information dissemination rate is monotonic, consistent with prior theoretical studies. / Doctor of Philosophy / People communicate and are influenced by other people when they reside in a social network. I analyze how corporate insiders' trading outcomes are influenced by their information environment within a network. Most current research rely on one specific type of connection (e.g., personal relationships, professional relationships, geographic proximity) to build the social network, I provide evidence that firm-level insiders are involuntarily connected by the institutional investor social network (cliques). Using archival study approach, I document that insider transactions in larger cliques exhibit lower abnormal trading profits, higher level of trading frequency, and larger amount of trade size, suggesting information dissemination is increasing in clique size. Then, I provide empirical evidence that the association between the value of information and the information dissemination rate is linear, consistent with prior theoretical studies.

This dissertation examines the role of insider trading activity in explaining announcement price effects of seasoned debt and equity issues for investment. As has been widely discussed in the finance literature, the announcement of new financing for investment purposes can convey good or bad news depending on the motivation behind the issue, the profitability of the investment, and the stage of firm development. If insider trading can effectively reduce information asymmetry about investment opportunities at the time of corporate financing announcements, markets can be expected to react less negatively to these announcements. Corporate insiders know more about the expected impact of current earnings and future investments than anyone else. Consequently, the value and direction of their personal trading should reflect, to some extent, their expectation of the value of the firm in the future. John and Mishra’s [1990] signaling model explains how insider trading can act as a joint signal along with a corporate announcement in sending information to the market efficiently. A cross-sectional analysis is conducted to test the hypothesis that announcements of new financing (debt or equity) for investment that are preceded by insider buying are accompanied by a less negative stock price response than issues that are preceded by insider selling. This analysis is followed by several tests designed to examine the robustness of this relationship. The results of this study suggest a correlation between trading and announcement period price effects for equity issues that is consistent with this hypothesis, though the effect is more pronounced for smaller firms. There appears to be no connection between insider trading and the announcement period reaction to debt issues, however. / Ph. D.

Made available in DSpace on 2016-03-15T19:33:37Z (GMT). No. of bitstreams: 1 Dirceu Bertin.pdf: 1912571 bytes, checksum: b156fe88b95c8b7fee18016d4aeea708 (MD5) Previous issue date: 2010-08-06 / With the globalization of the world´s economy and the stability that Brazilian economy reached in the last fifteen years, the country s capital markets started to strengthen, prompting more and more companies to open their capital through IPOs (Initial public offerings). This economic movement, which leads to the financing and invigoration of Brazilian companies, has to depend on reliable and fair capital markets. Therefore, it is essential that information is conveyed to all operators in a transparent and clear way as the right to information is a corollary to the right of free expression. Thus, it seems fit to investigate which is the most efficient form of fighting insider trading, in other words, the inappropriate use of privileged information in the stock market, and to make the wide and trustworthy diffusion of important information a common behavior applying the principle of full and fair disclosure in order to promote the credibility of capital market, giving opportunity to a greater number of people to invest their savings, which will consequently leverage companies and, thus, the country. / Com a globalização da economia mundial e a estabilidade da economia brasileira, alcançada nos últimos quinze anos, o mercado de capitais brasileiro começou a se fortalecer, levando mais e mais empresas a abrirem seu capital, por meio de oferta de ações ao público em geral. Este movimento econômico, que leva ao financiamento e fortalecimento das empresas brasileiras, precisa contar com um mercado de capitais confiável e justo e, para isso, é preciso que a informação seja transmitida a todos os operadores de maneira transparente, como corolário do direito do mercado à informação. Assim, será analisada qual a forma mais eficiente de se combater o insider trading, ou seja, o uso indevido de informação privilegiada do mercado de valores mobiliários, tornando comum a ampla e honesta divulgação das informações relevantes, aplicando-se o princípio do full and fair disclosure, para a promoção da credibilidade do mercado de capitais, o que ensejará que mais pessoas nele invistam suas economias e alavanquem as empresas e, por conseguinte, o país.

Thesis (MBA (Business Management))--Stellenbosch University, 2008. / ENGLISH ABSTRACT: This research report reviews South African and international legislation aimed at preventing insider trading and provides an overview of the successful criminal and civil proceedings taken against insiders. It highlights the possible preventative measures South African companies and legislature can take to reduce insider trading. The United States of America is one of the few countries that had successfully implemented legislation prohibiting insider trading prior to the 1990s. Most countries, including South Africa, only implemented legislation prohibiting insider trading in the late 1990s. Due to apartheid and sanctions against South Africa, the JSE has built up a legacy of being an insider's haven. The Directorate of Market Abuse has the task of transforming this legacy to restore investors' confidence in the market in order to promote economic growth. The success of the legislation is firstly measured by the knowledge the market has gained relating to insider trading since the implementation of the legislation. According to the South African market, insider trading is unethical, but 22% of the participants in the G:cnesis survey still believe that it is an acceptable practice in the South African market. South African companies therefore need to educate their employees and take preventative measures to reduce insider trading in order to erode this culture. Insider trading can only be prevented and reduced if legislation is enforced. Globally, few legal criminal proceedings have been successful, therefore legislation in most countries makes provision for civil remedies. As the burden of proof in a civil legal proceeding is only on "a balance of probabilities", civil proceedings against insiders have been successful. In South Africa, the majority of cases referred for civil legal action have been settled out of court by the alleged insider without admitting guilt to a criminal offence. The South African legislation regulating insider trading in the market is aligned with legislation globally. South Africa's future challenges are to maintain the initial success achieved in reducing insider trading. The establishment of a specific court specialising in financial crime and monitoring specific changes to legislation could increase the possibility of future success. / AFRIKAANSE OPSOMMING: Die projek ondersoek die Suid-Afikaanse en internasionale wetgewing teen binnehandel. Verder word die suksesvolle kriminele en siviele verrigtinge teen diegene wat hulle aan binnehandel skuldig maak onder die soeklig geplaas. Die projek beklemtoon die moontlike voorkomingsmaatreels wat Suid-Afrikaanse maatskappye en regslui kan implementeer om moontlike toekomstige binnehandel te bekamp. Die Verenigde State van Amerika is een van die min lande wat reeds voor die 1990s wetgewing teen binnehandel suksesvol geimplementeer bet. Ander lande, insluitend Suid-Afrika, het eers in die laat 1990s wetgewing teen binnehandel geproklameer. Apartheid en sanksies teen Suid-Afrika het 'n nalatenskap van vrye binnehandel op die JSE gelaat. Dit is die taak van die Direktoraat van Markmisbruik om hierdie nalatenskap uit te wis, sodat beleggersvertroue in die mark herstel kan word, wat weer tot ekonomiese groei sal lei. Een van die maatstawwe om die sukses van die wetgewing te meet, is om te bepaal hoeveel kennis die finansiele gemeenskap sedert die implementering van die nuwe wetgewing ingewin het. Volgens die finansiele gemeenskap is binnehandel oneties, maar 22% van die deelnemers aan die G:encsis-opname glo dat binnehandel wel in Suid-Afrika aanvaarbaar is. Daarom moet Suid-Afrikaanse maatskappye hulle werknemers se kennis oor binnehandel verbreed en ander voorkomende maatreels in plek stel om die kultuur van binnehandel te elimineer. Binnebandel kan slegs voorkom en verminder word indien wetgewing geimplementeer word. Relatief min kriminele sake teen binnehandel lei tot skuldigbevinding, maar plaaslike en internasionale wetgewing maak voorsiening vir siviele aksies. In 'n siviele hofsaak moet ingediende bewyse slegs na alle waarskynlikheid die skuld van die oortreder bewys, wat suksesvolle siviele vervolging moontlik maak. Die meerderheid siviele sake in Suid-Afrika word buite die bar geskik sonder dat die aangeklaagde skuld aan 'n kriminele daad erken. Die Suid-Afrikaanse wetgewing is in lyn met internasionale standaarde. Suid-Afrika staar verskeie uitdagings in die gesig ten opsigte van die handhawing van die huidige suksesvolle bekamping van binnehandel. Die moontlike totstandkoming van 'n spesiale hof, wat slegs finansiele verwante oortredings aanhoor en veranderings aan die wetgewing kontroleer, kan bydra tot die toekomstige sukses van die Suid-Afrikaanse wetgewing.

Made available in DSpace on 2016-04-26T20:20:53Z (GMT). No. of bitstreams: 1 Melina Marques Mendes Santana.pdf: 953155 bytes, checksum: 9ec7f895d4848d3ba880f4a4eb067e0d (MD5) Previous issue date: 2012-05-16 / This work aims at assessing the criminal treatment of the insider trading activities on the capital markets. It begins by assessing the most relevant aspects of capital markets and their impact for the economy. Subsequently, it studies the value of the information and the way it should be dealt with by current and potential market participants and any other stakeholder. Following the information collection phase, the differences between white collar crimes and conventional crimes are scrutinized. Then, the work is performed by verifyingand describing how the insider trading has been defined as a crime in the Brazilian legal system and by pointing out the pros and cons of the current legislation. There is also a brief analysis of the international legislation linked to the subject. Ultimately, this work intends to contribute to the elucidation of the insider trading subject and to the unequivocal elimination of that practice / Este trabalho consiste em uma pesquisa acerca do tratamento penal dispensado ao uso indevido de informação privilegiada no mercado de capitais insider trading. Inicia-se com a abordagem dos aspectos mais relevantes do mercado de capitais e de seu impacto na economia. Na sequência, é estudado o valor da informação no mercado de capitais e a forma pela qual deve ser acessada pelos investidores atuais ou potenciais , além dos demais players do mercado. Reunido este arcabouço de informações, passa-se a analisar o tema do Direito Penal Econômico, com as suas especificidades em relação à criminalidade tradicional para, então, verificar a forma pela qual a prática do insider trading foi criminalizada no ordenamento jurídico brasileiro, apontando-se os erros e acertos do legislador. Por fim, é feita uma breve análise da legislação estrangeira correlata ao tema. Com isso, pretende-se contribuir para a elucidação do tema e para o repúdio efetivo a tal prática