Exchange Trading Rules, Surveillance, and Suspected Insider Trading

53 Pages Posted: 12 Jun 2015

See all articles by Michael J. Aitken

Michael J. Aitken

Macquarie Graduate School of Management

Douglas J. Cumming

Florida Atlantic University

Feng Zhan

John Carroll University - Boler School of Business

Date Written: June 11, 2015

Abstract

We examine the impact of stock exchange trading rules and surveillance on the frequency and severity of suspected insider trading cases in 22 stock exchanges around the world over the period January 2003 through June 2011. Using new indices for market manipulation, insider trading, and broker-agency conflict based on the specific provisions of the trading rules of each stock exchange, along with surveillance to detect non-compliance with such rules, we show that more detailed exchange trading rules and surveillance over time and across markets significantly reduce the number of suspected cases, but increase the profits per suspected case.

Keywords: Insider trading, Surveillance, Exchange Trading Rules, Law and Finance

JEL Classification: G12, G14, G18, K22

Suggested Citation

Aitken, Michael J. and Cumming, Douglas J. and Zhan, Feng, Exchange Trading Rules, Surveillance, and Suspected Insider Trading (June 11, 2015). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2617301

Michael J. Aitken

Macquarie Graduate School of Management ( email )

North Ryde
Sydney, New South Wales 2109
Australia

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Feng Zhan (Contact Author)

John Carroll University - Boler School of Business ( email )

University Heights, OH 44118-4581
United States

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