Applying Developed‐Country Regulation in Emerging Markets: An Analysis of Thai Insider Trading

27 Pages Posted: 14 Dec 2012

See all articles by Pornanong Budsaratragoon

Pornanong Budsaratragoon

Chulalongkorn University - Faculty of Commerce and Accountancy

David Hillier

University of Strathclyde - Department of Accounting and Finance

Suntharee Lhaopadchan

Kasetsart University - Faculty of Management Sciences

Date Written: December 2012

Abstract

This paper undertakes an out‐of‐sample test of developed‐country insider trading regulation in an emerging market environment (Thailand), where severe information asymmetry, lax enforcement and poor pricing efficiency are endemic. Thai insider trading regulation, which mimics developed market rules, fails on all three measures of success. Insiders trade with impunity during a regulated trading ban. Their trading performance outperforms other investors at all times, and they continue to exploit their privileged position with respect to information flow. Our study suggests it is inappropriate for emerging market regulators to adopt developed market regulation without first considering the unique characteristics of their own environment.

Keywords: Regulation, Insider trading, Emerging markets, Thailand, Earnings

JEL Classification: G14

Suggested Citation

Budsaratragoon, Pornanong and Hillier, David and Lhaopadchan, Suntharee, Applying Developed‐Country Regulation in Emerging Markets: An Analysis of Thai Insider Trading (December 2012). Accounting & Finance, Vol. 52, Issue 4, pp. 1013-1039, 2012. Available at SSRN: https://ssrn.com/abstract=2189337 or http://dx.doi.org/10.1111/j.1467-629X.2011.00465.x

Pornanong Budsaratragoon

Chulalongkorn University - Faculty of Commerce and Accountancy ( email )

Bangkok, 10330
Thailand

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)

Suntharee Lhaopadchan

Kasetsart University - Faculty of Management Sciences ( email )

199 Sukhumvit Road
Thungsukhla
Siracha, Chonburi 20230
Thailand

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