The Effect of Cross‐Listing on Insider Trading Returns

19 Pages Posted: 9 Sep 2012

See all articles by Millicent Chang

Millicent Chang

The University of Western Australia; University of Wollongong

Ross Corbitt

affiliation not provided to SSRN

Date Written: September 2012


Holding privileged positions within firms, insiders can acquire excessive private benefits based on their informational advantage. The bonding hypothesis suggests that this can be prevented when a firm is cross‐listed on an exchange with higher regulatory and legal costs compared with its home exchange. When cross‐listed insiders buy and sell shares, the returns earned are lower than in domestic firms. This difference is attributable to the increased shareholder protection in cross‐listed firms that constrains the extraction of private benefits, such that when cross‐listed insiders trade, they trade for non‐informational reasons.

Keywords: Cross‐listing, Insider trading, Investor protection

JEL Classification: G10, G15

Suggested Citation

Chang, Millicent and Corbitt, Ross, The Effect of Cross‐Listing on Insider Trading Returns (September 2012). Accounting & Finance, Vol. 52, Issue 3, pp. 723-741, 2012. Available at SSRN: or

Millicent Chang (Contact Author)

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009

University of Wollongong ( email )

Northfields Avenue
Wollongong, New South Wales 2522

Ross Corbitt

affiliation not provided to SSRN ( email )

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