Do Insider Trading Laws Matter? Some Preliminary Comparative Evidence

54 Pages Posted: 4 Nov 2004

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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

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:

Laura Nyantung Beny (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States

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