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Advance disclosure of insider transactions: Empirical evidence from the Vietnamese stock market

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  • Lefebvre, Jérémie
  • Mazza, Paolo

Abstract

We investigate the impact of legal insider trading announcements on stock returns in Vietnam. Vietnamese insiders must announce their trading intentions in advance as well as after the actual trade, which contrasts with the vast majority of countries where only post-trade announcement is mandatory. This regulatory setting allows to put to test the predictions from the theoretical models of advance disclosures (Huddart et al., 2004, Lenkey, 2014). Consistent with the theoretical literature, we find that the abnormal returns are large and significant after the pre-trade announcement, showing that the market takes into consideration the information content of the insiders' intention to trade. In addition, no significant stock price effect is found after the announcement of the actual trade occurrence or cancellation. We argue in favor of the implementation of advance disclosure policies since they help mitigate the returns obtained by insiders, better share the profits with outsiders and contribute to a better information dissemination.

Suggested Citation

  • Lefebvre, Jérémie & Mazza, Paolo, 2023. "Advance disclosure of insider transactions: Empirical evidence from the Vietnamese stock market," International Review of Law and Economics, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:irlaec:v:74:y:2023:i:c:s0144818823000157
    DOI: 10.1016/j.irle.2023.106137
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    More about this item

    Keywords

    Insider trading; Advance disclosure; Pre-trade announcement; Regulation; Event study;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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