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Exchange trading rules, surveillance and suspected insider trading

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  • Aitken, Michael
  • Cumming, Douglas
  • Zhan, Feng

Abstract

We examine the impact of stock exchange trading rules and surveillance on the frequency and severity of suspected insider trading cases in 22 stock exchanges around the world over the period January 2003 through June 2011. Using new indices for market manipulation, insider trading, and broker–agency conflict based on the specific provisions of the trading rules of each stock exchange, along with surveillance to detect non-compliance with such rules, we show that more detailed exchange trading rules and surveillance over time and across markets significantly reduce the number of suspected cases, but increase the profits per suspected case.

Suggested Citation

  • Aitken, Michael & Cumming, Douglas & Zhan, Feng, 2015. "Exchange trading rules, surveillance and suspected insider trading," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 311-330.
  • Handle: RePEc:eee:corfin:v:34:y:2015:i:c:p:311-330
    DOI: 10.1016/j.jcorpfin.2015.07.013
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    Cited by:

    1. Neupane, Suman & Rhee, S. Ghon & Vithanage, Kulunu & Veeraraghavan, Madhu, 2017. "Trade-based manipulation: Beyond the prosecuted cases," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 115-130.
    2. Agrawal, Anup & Cooper, Tommy, 2015. "Insider trading before accounting scandals," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 169-190.
    3. Laure de Batz, 2018. "Financial Impact of Regulatory Sanctions on French Listed Companies," Working Papers IES 2018/10, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Apr 2018.
    4. Dai, Lili & Fu, Renhui & Kang, Jun-Koo & Lee, Inmoo, 2016. "Corporate governance and the profitability of insider trading," Journal of Corporate Finance, Elsevier, vol. 40(C), pages 235-253.
    5. Batten, Jonathan A. & Lucey, Brian M. & Peat, Maurice, 2016. "Gold and silver manipulation: What can be empirically verified?," Economic Modelling, Elsevier, vol. 56(C), pages 168-176.
    6. Atanasov, Vladimir & Davies, Ryan J. & Merrick, John J., 2015. "Financial intermediaries in the midst of market manipulation: Did they protect the fool or help the knave?," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 210-234.
    7. repec:spr:infosf:v:19:y:2017:i:3:d:10.1007_s10796-017-9761-3 is not listed on IDEAS
    8. repec:eee:finmar:v:35:y:2017:i:c:p:104-129 is not listed on IDEAS
    9. Aharony, Joseph & Liu, Chelsea & Yawson, Alfred, 2015. "Corporate litigation and executive turnover," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 268-292.
    10. Cumming, Douglas & Dannhauser, Robert & Johan, Sofia, 2015. "Financial market misconduct and agency conflicts: A synthesis and future directions," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 150-168.

    More about this item

    Keywords

    Insider trading; Surveillance; Exchange trading rules; Law and finance;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • 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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