Advance Disclosure of Insider Transactions: Empirical Evidence from the Vietnamese Stock Market

39 Pages Posted: 22 Jun 2022

See all articles by Paolo Mazza

Paolo Mazza

IESEG School of Management; LEM CNRS 9221

Jérémie Lefebvre

IESEG School of Management

Abstract

We investigate the impact of legal insider trading announcements on stock returns in Vietnam. Vietnamese insiders must announce their trading intentions in advance as well as after the actual trade, which contrasts with the vast majority of countries where only post-trade announcement is mandatory. This regulatory setting allows to put to test the predictions from the theoretical models of advance disclosures (Huddart, Hughes, and Williams (2004), Lenkey (2014)). Consistent with the theoretical literature, we find that the abnormal returns are large and significant after the pre-trade announcement, showing that the market takes into consideration the information content of the insiders' intention to trade. In addition, no significant stock price effect is found after the announcement of the actual trade occurrence or cancellation. We argue in favor of the implementation of advance disclosure policies since they help mitigate the returns obtained by insiders, better share the profits with outsiders and contribute to a better information dissemination.

Keywords: insider trading, advance disclosure, pre-trade announcement, Regulation, event study

Suggested Citation

Mazza, Paolo and Lefebvre, Jérémie, Advance Disclosure of Insider Transactions: Empirical Evidence from the Vietnamese Stock Market. Available at SSRN: https://ssrn.com/abstract=4143220 or http://dx.doi.org/10.2139/ssrn.4143220

Paolo Mazza (Contact Author)

IESEG School of Management ( email )

3 Rue de la Digue
Office: A321
Lille, 59 59000
France

HOME PAGE: http://https://sites.google.com/site/paolomazzaphd/

LEM CNRS 9221 ( email )

Jérémie Lefebvre

IESEG School of Management ( email )

3 Rue de la Digue
Lille, 59000
France

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