Do Insider Trading Laws Matter? Some Preliminary Comparative Evidence

44 Pages Posted: 22 Feb 2005

Multiple version iconThere are 2 versions of this paper

Date Written: January 2005


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, Market efficiency, Ownership structure, Law and finance, Comparative capital markets

JEL Classification: K22, G14, G15, G18, G32

Suggested Citation

Beny, Laura Nyantung, Do Insider Trading Laws Matter? Some Preliminary Comparative Evidence (January 2005). William Davidson Institute Working Paper No. 741, Available at SSRN: or

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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