Institutional Discipline of Insider Trading through Shareholder Litigation

2012 ◽  
Author(s):  
C.S. Agnes Cheng ◽  
Henry Huang ◽  
Yinghua Li
Keyword(s):  
Insider Trading ◽  
Shareholder Litigation

Does Shareholder Litigation Deter Insider Trading?

2016 ◽  
Vol 1 (2) ◽  
pp. 275-318 ◽  
Author(s):  
C. S. Agnes Cheng ◽  
Henry He Huang ◽  
Yinghua Li
Keyword(s):  
Insider Trading ◽  
Shareholder Litigation

Shareholder Litigation and Conservative Accounting: Evidence from Universal Demand Laws

2020 ◽  
Author(s):  
Hariom Manchiraju ◽  
Vivek Pandey ◽  
K. R. Subramanyam
Keyword(s):  
Corporate Governance ◽  
Insider Trading ◽  
Accounting Conservatism ◽  
Litigation Risk ◽  
Short Term ◽  
Conservative Accounting ◽  
Shareholder Litigation ◽  
Ex Ante ◽  
Governance Quality ◽  
Corporate Governance Quality

We use the staggered adoption of the Universal Demand Laws (UD Laws) to examine the effect of an exogenous reduction in shareholders' ability to litigate on the extent of accounting conservatism. On average, we find an increase in reporting conservatism post UD. The increased conservatism is concentrated in firms contemplating equity issuance, with high proportion of monitoring investors, and high corporate governance quality. In contrast, firms with specific short-term incentives for aggressive accounting, such as those narrowly beating benchmarks, those with abnormal insider trading and those likely to violate debt covenants, weakly governed firms, and firms with high ex ante litigation risk decrease reporting conservatism after UD. Our results suggest that the relation between the litigation environment and reporting conservatism is complex and dependent on specific characteristics and unique circumstances of the firms.

scholarly journals The Sound of Silence: What Do We Know When Insiders Do Not Trade?

2021 ◽  
Author(s):  
George P. Gao ◽  
Qingzhong Ma ◽  
David T. Ng ◽  
Ying Wu
Keyword(s):  
Stock Returns ◽  
Information Content ◽  
Insider Trading ◽  
Bad News ◽  
Litigation Risk ◽  
Shareholder Litigation

This paper examines the information content of insider silence, periods of no insider trading. We hypothesize that, to avoid litigation risk, rational insiders do not sell own-company shares when they anticipate bad news; neither would they buy, given unfavorable prospects. Thus, they keep silent. By contrast, insiders sell shares when they do not anticipate significant bad news. Future stock returns are significantly lower following insider silence than following insider net selling, especially among firms with higher litigation risk. We examine two quasinatural experiments where new laws result in changes in shareholder litigation risks for insiders. In both cases, with higher shareholder litigation risks, stocks where insiders stay silent earn significantly lower returns than other stocks. This paper was accepted by Karl Diether, finance.

Attentive Insider Trading

CFA Digest ◽  
2015 ◽  
Vol 45 (3) ◽  
Author(s):  
Isaac T. Tabner
Keyword(s):  
Insider Trading

Opportunities for improving the insider laws: A comparative analysis of the practice in the USA and Russia

2020 ◽  
Vol 26 (4) ◽  
pp. 796-814
Author(s):  
E.K. Ovakimyan
Keyword(s):  
Financial Markets ◽  
Insider Trading ◽  
Negative Impact ◽  
Business Environment ◽  
Market Manipulation ◽  
Insider Information ◽  
Analysis And Synthesis ◽  
The Usa ◽  
Legislative Perfection ◽  
Definition Of

Subject. The article examines the laws regulating insider trading. Objectives. The study outlines recommendations for refining Law On Countering the Illegal Use of Insider Information and Market Manipulation and Amendments to Some Legislative Acts of the Russian Federation, № 224-ФЗ of July 27, 2010. Methods. The methodological framework includes a general dialectical method, analysis and synthesis, induction and deductions, and some specific methods, such as comparative and formal logic analysis to specify the definition of insider information, structural logic and functional analysis to improve the mechanism for countering insider trading and market manipulation. Results. We discovered key drawbacks to be addressed so as to improve the business environment in Russia. Although the Russia laws mainly mirror the U.S. laws, they present a more extended list of terms concerning the insider information. I believe the legislative perfection should be continued. Conclusions and Relevance. The study helps apply the findings to outline a new legislative regulation or amend the existing ones, add a new mention on the course of financial markets to students’ books, develop new methods for detecting and countering and improving the existing ones. If all parties to insider relationships use the findings, they will prevent insider trading crimes in financial markets and (or) reduce the negative impact of such crimes on the parties.

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