Elements of Effective Insider Trading Laws

Aaron Gilbert, Bart Frijns and Alireza-Rad Tourani

No 19073, Working Paper Series from Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation

Abstract: While countries have been more than willing to regulate insider trading it is an open question as to whether this has resulted in improvements for those markets. In particular lawmakers have had to largely structure the legal regimes with little guidance as to what makes an effective insider trading law. We seek to address this by examining the aspects of a legal regime that result in reductions in information trading and trading costs. Employing a sample of 18 countries we compare specific and quantifiable aspects of the legal regime with the measures of transactions costs in a sample of up to 70 randomly selected companies per market. We find that stronger laws result in reductions in the cost of informed trading. Particularly we find that broader laws laws that employ financial rather than criminal damages and laws that are enforced by strong public regulators perform best. These results should help to enlighten regulator attempts to create strong and effective insider trading laws

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ir.wgtn.ac.nz/handle/123456789/19073

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcsr:19073

Access Statistics for this paper

More papers in Working Paper Series from Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation ISCR, PO Box 600, Victoria University Wellington 6140, New Zealand. Contact information at EDIRC.
Bibliographic data for series maintained by Library Technology Services ().