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The Effect of Regulation Changes on Insider Trading

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  • Jeffrey F. Jaffe

Abstract

Though lawyers and economists have speculated about the consequences of effective insider regulation, empirical research has yet to establish whether the regulation of insiders is even effective. Following the Securities and Exchange Act of 1933-1934, the most significant changes in insider regulation have occurred through a few important decisions in case law. This study examines the changes in the volume and profitability of insider trading after each of three important legal decisions concerning insiders. No. significant change in the properties of insider trading was observed following any of these three events. In addition, there appeared to be no combined effect from the three decisions. Thus it is concluded that the null hypothesis that changes in regulation had no effect on the trading of insiders cannot be rejected.

Suggested Citation

  • Jeffrey F. Jaffe, 1974. "The Effect of Regulation Changes on Insider Trading," Bell Journal of Economics, The RAND Corporation, vol. 5(1), pages 93-121, Spring.
  • Handle: RePEc:rje:bellje:v:5:y:1974:i:spring:p:93-121
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    Cited by:

    1. Chirkova, Elena & Petrov, Vladislav, 2015. "The Diagnosis of the Insider Trading During the Conflict of Shareholders of “VimpelCom” in 2005-2013," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 2, pages 151-173.
    2. Ozlem Akin & Nicholas S. Coleman & Christian Fons-Rosen & José-Luis Peydró, 2016. "Political Connections: Evidence From Insider Trading Around TARP," Working Papers 935, Barcelona Graduate School of Economics.

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