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http://ssrn.com/abstract=336702
 
 

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Insider Trading in Hong Kong: Concentrated Ownership versus the Legal Environment


Eric C. Chang


University of Hong Kong - School of Business

Jun Zhu


University of Hong Kong - Faculty of Business and Economics

J. Michael Pinegar


Brigham Young University - Marriott School of Management

October 2002

Brigham Young University Working Paper

Abstract:     
We examine the profitability of insider trading in Hong Kong between 1993 and 1997. On average, firms in Hong Kong have very concentrated ownership and insiders trade more actively and account for larger fractions of total turnover of their firms' shares than do US insiders. Inside sellers in Hong Kong earn negligible rents; however, inside buyers earn statistically and economically significant positive mean abnormal returns. Inside buyers' abnormal returns are especially large for firms in consolidated industries. We argue that such firms are less transparent than firms that operate in more focused businesses and, consequently, that shares of these firms are more likely to provide opportunities for insiders to trade based on privileged information.

Number of Pages in PDF File: 41

Keywords: insider trading, transparency, corporate governance

JEL Classification: G32, G38

working papers series


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Date posted: January 10, 2003  

Suggested Citation

Chang, Eric C. and Zhu, Jun and Pinegar, J. Michael, Insider Trading in Hong Kong: Concentrated Ownership versus the Legal Environment (October 2002). Brigham Young University Working Paper. Available at SSRN: http://ssrn.com/abstract=336702 or http://dx.doi.org/10.2139/ssrn.336702

Contact Information

Eric Chieh C. Chang
University of Hong Kong - School of Business ( email )
Meng Wah Complex
Pokfulam Road
Hong Kong
China
Jun Zhu
University of Hong Kong - Faculty of Business and Economics ( email )
Pokfulam Road
Hong Kong
China
J. Michael Pinegar (Contact Author)
Brigham Young University - Marriott School of Management ( email )
Provo, UT 84602
United States
801-422-3088 (Phone)
801-422-0108 (Fax)
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