International Equity Portfolio Investment and Enforcement of Insider Trading Laws: A Cross-Country Analysis

Review of Quantitative Finance and Accounting, 2019

36 Pages Posted: 23 Jan 2020

See all articles by Frank Kwabi

Frank Kwabi

De Montfort University

Agyenim Boateng

Glasgow Caledonian University

Emmanuel Adegbite

University of Nottingham

Date Written: December 20, 2019

Abstract

In this study, we examine the effects of stringent insider trading laws’ enforcement, institutions and stock market development on international equity portfolio allocation using data from 44 countries over the period 2001-2015. Our results suggest that stringent insider trading laws and their enforcement exert a positive and significant impact on international portfolio investment allocation. Further analysis indicates that the interaction between a country’s institutional quality, stock market development and enforcement of insider trading laws have a positive and significant effect on international equity portfolio allocation. The findings of this study have implications for the design of portfolio investment trading strategies and contribute to the literature on foreign equity investment decisions.

Keywords: Insider trading laws, Institutional quality, Stock market development, Foreign equity portfolio flows

JEL Classification: G11, G14, F3

Suggested Citation

Kwabi, Frank and Boateng, Agyenim and Adegbite, Emmanuel, International Equity Portfolio Investment and Enforcement of Insider Trading Laws: A Cross-Country Analysis (December 20, 2019). Review of Quantitative Finance and Accounting, 2019. Available at SSRN: https://ssrn.com/abstract=3507771 or http://dx.doi.org/10.2139/ssrn.3507771

Frank Kwabi

De Montfort University ( email )

The Gateway
Leicester, LE1 9BH
United Kingdom

Agyenim Boateng

Glasgow Caledonian University ( email )

Scotland
United Kingdom

Emmanuel Adegbite (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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