An Empirical Analysis of Illegal Insider Trading

The Effects of a Change in Market Abuse Regulation on Abnormal Returns and Volumes: Evidence from the Amsterdam Stock Market

“…This run-up suggests leakage of information and illegal insider trading and is consistent with the literature documenting stock market behaviour surrounding M&A announcements (see e.g., Keown and Pinkerton 1981;Meulbroek 1992). This run-up is no longer visible after MAD, which means the results for Alliances/M&A Announcements lend support for Hypothesis 1, consistent with a cleaner market after MAD.…”

“…The choice of the length of the estimation window used in the event study literature covers a range of approaches. Observed lengths are 240 trading days (Brown and Warner 1985;Monteiro et al 2007), 150 trading days (Meulbroek 1992;Sanders and Zdanowicz 1992), and 100 trading days (Kabir and Vermaelen 1996;Keown and Pinkerton 1981). We use an estimation window of 120 trading days.…”

“…The results using this 60-day pre-announcement period are generally similar to those looking at the 30-day pre-announcement period, and are available from the authors upon request. movements (Meulbroek 1992). In addition to recognition of informed trading, the market may anticipate certain announcements.…”

The Ethics of Insider Trading Revisited

“…After examining some specific cases, Dooley (1980) finds that insider trading did not delay the public disclosure of information. The improved informational efficiency is empirically confirmed by Meulbroek (1992), Cornell and Sirri (1992), Chakravarty and McConnell (1997) and Aktas et al (2007). Carlton and Fischel (1983) point out that insider trading creates an additional method for communicating information.…”

Analyzing Insider Trading from the Perspectives of Utilitarian Ethics and Rights Theory

“…Trading on inside information causes information to be released into the marketplace sooner rather than later, thus causing stock prices to move in the right direction quicker than would otherwise be the case. Studies by Meulbroek (1992), Cornell and Surri (1992), and Chakravarty and McConnell (1997) support this position. Another argument in favor of insider trading is that inside information is property, and preventing individuals from trading their property violates their property rights.…”