Do What Insiders Do: Abnormal Performances after the Release of Insiders' Relevant Transactions

Abstract

Every country with a developed security market considers market egalitarianism and equal access fundamental principles and, therefore, has a legislation which prevents corporate insiders from trading in their own company's shares when they own private information.

This research intends to establish if insider trading is really a phenomenon extraneous to the Italian stock market as the scarce jurisprudence in subject seems to suggest or if our rules are not effective. Considering the market reaction after changes in managerial ownership, we can say that insiders have private information and that thanks to their exploitation in their trading activities they are able to obtain significant abnormal returns between the first and the third month following the change operation.

Keywords: Trading, event sudy, abnormal returns, ownership changes

JEL Classification: G14, G32