Insider Trading and Innovation
77 Pages Posted: 23 Aug 2015 Last revised: 13 Aug 2016
Date Written: August 13, 2016
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: Suggested Citation