Do Insider Trading Laws Matter? Some Preliminary Comparative Evidence

Beny, Laura Nyantung

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Do Insider Trading Laws Matter? Some Preliminary Comparative Evidence

American Law and Economics Review, Vol. 7, No. 1, pp. 144-83, 2005

54 Pages Posted: 4 Nov 2004

See all articles by Laura Nyantung Beny

Laura Nyantung Beny

University of Michigan Law School

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Abstract

Despite the longstanding insider trading debate, there is little empirical research on insider trading laws, especially in a comparative context. The article attempts to fill that gap. I find that countries with more prohibitive insider trading laws have more diffuse equity ownership, more accurate stock prices, and more liquid stock markets. These findings are generally robust to controlling for measures of disclosure and enforceability and suggest that formal insider trading laws (especially their deterrent components) matter to stock market development. The article suggests further avenues of empirical research on the specific mechanisms through which insider trading laws might matter and the political economy of their adoption.

Keywords: insider trading law, law and finance, comparative evidence

JEL Classification: G10, G18, G38, K22, P50

Suggested Citation: Suggested Citation

Beny, Laura Nyantung, Do Insider Trading Laws Matter? Some Preliminary Comparative Evidence. American Law and Economics Review, Vol. 7, No. 1, pp. 144-83, 2005, Available at SSRN: https://ssrn.com/abstract=623481