Лобанова Екатерина Дмитриевна
The Influence of the Regulatory Rigidity on Insider Trading
Стратегическое управление финансами фирмы
The highest importance of eliminating insider trading is to increase the attractiveness of the stock market for investors. Now one of the vaguest issues is the imposing of the well-designed regulation of the stock market, which would really reduce the level of insider trading. This research has an ambitious goal to evaluate the impact of regulatory rigidity on insider trading. A corresponding index is built in the work, which assesses the state of the regulatory institution in the country, based on a study of legislation of more than twenty countries. To assess insider trading, the method of cumulative abnormal returns was used, which has already become classic. The main hypothesis - that more stringent regulation leads to a decrease in insider trading - was tested on a sample of mergers and acquisitions for 2017-2018 in ten countries using regression analysis. The findings confirm the hypothesis. In conclusion, insider trading is truly market abuse, which significantly violates the principles of fair trade and leads to an outflow of capital from the country. Each country should obtain effective instruments to eliminate this phenomenon.