The Determinants and Value Impact of Regulatory Compliance: An Analysis of Insider Trading Disclosures

42 Pages Posted: 13 Feb 2008

See all articles by Emanuele Bajo

Emanuele Bajo

University of Bologna - Department of Management

Marco Bigelli

University of Bologna - Department of Management

David Hillier

University of Strathclyde - Department of Accounting and Finance

Barbara Petracci

University of Bologna- Department of Management

Date Written: February 11, 2008

Abstract

This paper investigates the determinants of regulatory compliance and its effect on informational efficiency. Exploiting a unique enforcement and reporting framework for corporate insider trading in Italy, we present three main findings. First, board governance, such as chief executive-chairman duality and the proportion of non-executive directors, does not increase the propensity of firms to comply with regulation. Second, firms with concentrated ownership and control, together with those run by families and cooperatives are most likely to comply with regulation. Third, the market responds less to reporting by fully compliant firms and those with strong family control.

Keywords: Regulatory Compliance, Corporate Governance, Corporate Insider Trading, Regulation, Italy, Family Firms

JEL Classification: G14, G38

Suggested Citation

Bajo, Emanuele and Bigelli, Marco and Hillier, David and Petracci, Barbara, The Determinants and Value Impact of Regulatory Compliance: An Analysis of Insider Trading Disclosures (February 11, 2008). Available at SSRN: https://ssrn.com/abstract=1092798 or http://dx.doi.org/10.2139/ssrn.1092798

Emanuele Bajo

University of Bologna - Department of Management ( email )

Via Capo di lucca, 34
Bologna, 40126
Italy
+39 051 209 8091 (Phone)
+39 051 246411 (Fax)

Marco Bigelli (Contact Author)

University of Bologna - Department of Management ( email )

Via Capo di Lucca 34
Bologna, 40126
Italy
+39 051 2098060 (Phone)
+39 051 6390612 (Fax)

David Hillier

University of Strathclyde - Department of Accounting and Finance ( email )

Curran Building
100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 330 4809 (Phone)
44 0141 330 4442 (Fax)

Barbara Petracci

University of Bologna- Department of Management ( email )

Via Capo di Lucca 34
Bologna, 40100
Italy

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