Insider Trading and Innovation

77 Pages Posted: 23 Aug 2015 Last revised: 13 Aug 2016

See all articles by Ross Levine

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Chen Lin

The University of Hong Kong - Faculty of Business and Economics

Lai Wei

Lingnan University - Department of Finance and Insurance

Multiple version iconThere are 2 versions of this paper

Date Written: August 13, 2016

Abstract

We assess whether restrictions on insider trading accelerate or slow technological innovation. Based on over 75,000 industry-country-year observations across 94 economies from 1976 to 2006, we find that enforcing insider-trading laws spurs innovation — as measured by patent intensity, scope, impact, generality, and originality. Furthermore, the evidence is consistent with the view that restricting insider trading accelerates innovation by improving the valuation of, and increasing the flow of equity financing to, innovative activities.

Keywords: Insider Trading, Financial Regulation, Patents, Finance and Economic Growth

JEL Classification: G14, G18, O30, F63

Suggested Citation

Levine, Ross Eric and Lin, Chen and Wei, Lai, Insider Trading and Innovation (August 13, 2016). Available at SSRN: https://ssrn.com/abstract=2649295 or http://dx.doi.org/10.2139/ssrn.2649295

Ross Eric Levine (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Chen Lin

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Lai Wei

Lingnan University - Department of Finance and Insurance ( email )

8 Castle Peak Road
Lingnan University
Hong Kong, New Territories
China

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