Insider Trading and Corporate Governance: The Case of Germany

28 Pages Posted: 27 Apr 2009

See all articles by André Betzer

André Betzer

University of Wuppertal - Schumpeter School of Business and Economics

Erik Theissen

University of Mannheim - Finance Area

Abstract

We analyse transactions by corporate insiders in Germany. We find that insider trades are associated with significant abnormal returns. Insider trades that occur prior to an earnings announcement have a larger impact on prices. This result provides a rationale for the UK regulation that prohibits insiders from trading prior to earnings announcements. Both the ownership structure and the accounting standards used by the firm affect the magnitude of the price reaction. The position of the insider within the firm has no effect, which is inconsistent with the informational hierarchy hypothesis.

Suggested Citation

Betzer, André and Theissen, Erik, Insider Trading and Corporate Governance: The Case of Germany. European Financial Management, Vol. 15, Issue 2, pp. 402-429, March 2009, Available at SSRN: https://ssrn.com/abstract=1376564 or http://dx.doi.org/10.1111/j.1468-036X.2007.00422.x

André Betzer (Contact Author)

University of Wuppertal - Schumpeter School of Business and Economics ( email )

Gaußstraße 20
Wuppertal
Germany

HOME PAGE: http://finance.uni-wuppertal.de/index.php?id=1153

Erik Theissen

University of Mannheim - Finance Area ( email )

Mannheim, 68131
Germany

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