Abstract

http://ssrn.com/abstract=373520
 
 

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Insider Trading Restrictions and Analysts' Incentives to Follow Firms


Robert M. Bushman


University of North Carolina Kenan-Flagler Business School

Joseph D. Piotroski


Stanford Graduate School of Business

Abbie J. Smith


University of Chicago - Booth School of Business

January 2003


Abstract:     
Motivated by extant finance theory predicting that insider trading crowds out private information acquisition by outside investors, we use analyst following data for 100 countries for the years 1987-1998, to study whether analyst following increases following adoption of or the initial enforcement of insider trading legislation. We document that both the intensity of analyst coverage (average number of analysts covering followed firms within a country) and breadth of coverage (the proportion of domestic listed firms followed by analysts) increase after initial enforcement of insider trading laws. We find that this increase is most prominent in emerging market and non-liberalized countries.

Number of Pages in PDF File: 54

Keywords: insider trading, analyst following, enforcement of laws

JEL Classification: D82, F30, G28, G29, K42, M41

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Date posted: February 18, 2003  

Suggested Citation

Bushman, Robert M. and Piotroski, Joseph D. and Smith, Abbie J., Insider Trading Restrictions and Analysts' Incentives to Follow Firms (January 2003). Available at SSRN: http://ssrn.com/abstract=373520 or http://dx.doi.org/10.2139/ssrn.373520

Contact Information

Robert M. Bushman
University of North Carolina Kenan-Flagler Business School ( email )
McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-9809 (Phone)
HOME PAGE: http://public.kenan-flagler.unc.edu/faculty/bushmanr/

Joseph D. Piotroski (Contact Author)
Stanford Graduate School of Business ( email )
518 Memorial Way
Stanford, CA 94305-5015
United States

Abbie J. Smith
University of Chicago - Booth School of Business ( email )
1101 East 58th Street
Graduate School of Business
Chicago, IL 60637-1561
United States
773-702-7295 (Phone)
773-702-0458 (Fax)
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