Late Disclosure of Insider Trades: Who Does It and Why?

Abstract

We attempt to understand the personal incentives that motivate corporate insiders to engage in unethical behavior such as delayed trade disclosure. Delayed disclosure affects corporate transparency and other shareholders in the firm potentially suffer investment losses because they are unaware of insiders' activities. Using archival data from the 300 largest Australian firms between 2007 and 2011, the results show that risk factors such as insider age and tenure and wealth effects in the form of insider shareholdings affect the likelihood of delayed reporting. Governance positions such as committee membership mitigate this behavior. Our study highlights the importance of considering individual insider's wealth and risk factors. The selfmonitoring role of governance positions is also indicative of the effectiveness of internal corporate governance in the prevention of illegal insider behavior.

Are All Directors Treated Equally? Evidence from Director Turnover Following Opportunistic Insider Selling

“…As opportunistic sales are often based on information obtained through the insider's position in the firm, which is an information channel outsiders cannot access through their own independent and lawful due diligence, we argue that this behavior is considered unethical as well as unfair from the rights-based angle (Klaw & Mayer, 2019;McGee, 2008). In this case, the rights of other shareholders are violated because they have no legal access to the information on which the insider trading activity is done (Chang & Lim, 2016). From a utilitarian point of view, an action is viewed as good if the result is the greatest good for the greatest number (Mill, 1861(Mill, /1879.…”

Empirical Study Toward Corporate Legal Compliance and Anti-Corruption for Top Construction Engineering Consulting Firms

“…Dishonest behaviors by corporate managers or insiders have led to many corporate scandals over the past few decades. Since corporate scandals can cause serious damage to the company, many companies have implemented an integrity program based on the principle of legal compliance, the content of which is similar to the aforementioned prevention programs (Chen et al, 2020;Chang & Lim, 2016). A code of conduct program can infiltrate enterprises into the entire work environment through screening new employees, education and training, reward and punishment systems, and hiring integrity supervisors.…”

Combating Violent Extremism and Radicalization in the Digital Era

“…Specifically, compared to the amount of work done on logging software and algorithmic modelling approaches, relatively less work has been carried out to clarify the important psychological and sociological factors for cyber security and for insider threat. Importantly, much of the psychological data is scant and focuses on correlations between the so-called Big Five personality traits (i.e., extraversion, openness to experience, agreeableness, emotional stability, conscientiousness; John & Srivastava, 1999; see Axelrad, Sticha, Brdiczka, & Shen, 2013, for an example of a Bayesian network model of insider threat using the Big Five traits) or demographic variables (e.g., gender and age; see Chang & Lim, 2014) with insider threat activity. Thus, the focus of this chapter is to articulate the major challenges for understanding insider threat in the context of cyber security, particularly from a personality and person-specific perspective.…”