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Insider regulation and the incentive to invest as an insider

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  • Vahe Lskavyan

Abstract

There is an ongoing debate about the pros and cons of regulating insider transactions. We contribute to this debate by showing that the investor may prefer tougher rather than weaker regulation of his future insider activity. This is because regulation can reduce not only the expected benefits, but also the expected costs of insider status. Tough enough regulation can make the expected cost savings greater than the lost benefits and increase incentives to invest as an insider. Weaker regulation, in contrast, can be worse than no regulation in terms of these incentives. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Vahe Lskavyan, 2015. "Insider regulation and the incentive to invest as an insider," Economics of Governance, Springer, vol. 16(3), pages 207-227, August.
    • Handle: RePEc:spr:ecogov:v:16:y:2015:i:3:p:207-227
    DOI: 10.1007/s10101-015-0162-0
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    References listed on IDEAS

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